Q4 2024 American Tower Corp Earnings Call

Recorded following the prepared remarks, we will open the call for questions if you'd like to ask a question. Please press one followed by zero now I would now like to turn the call over to your host Adam Smith Senior Vice President of Investor Relations and F. P. N. A please go ahead, Sir good morning, and thank you for joining American tower's fourth quarter and full year 2000.

24 earnings conference call we.

We have posted a presentation, which we'll refer to throughout our prepared remarks under the Investor Relations tab of our website Www Dot American tower Dot com.

I am joined on the call today by Steve <unk>, our president and CEO and Rod Smith, our executive Vice President CFO and Treasurer.

Following our prepared remarks, we will open up the call for your questions before.

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 2025 outlook capital allocation and future operating performance.

M Smith senior Vice President of Investor Relations and F. P. M. Please go ahead, Sir good morning, and thank you for joining American tower's fourth quarter full year 2024 earnings conference call we.

And any other statements regarding matters that are not historical facts.

You should be aware that certain factors may affect us in the future and could cause actual results to differ materially from those expressed in these forward looking statements.

We have posted a presentation, which we'll refer to throughout our prepared remarks under the Investor Relations tab of our website Www Dot American tower Dot com.

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

Those that will be set forth in our upcoming Form 10-K for the year ended December 31, 2024 and in other filings, we make with the SEC.

Steve: I am joined on the call today by Steve <unk>, our president and CEO.

Steve: Rod Smith, our executive Vice President and CFO and Treasurer.

We urge you to consider these factors and remind you that we undertake no obligation to update the information contained in this call to reflect subsequent events or circumstances with that I will turn the call over to Steve.

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

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.

Steve: Thanks, Adam Good morning, everyone and thanks for joining the call.

Steve: Our expectations regarding future growth, including our 2025 outlook capital allocation and future operating performance.

Steve: When I stepped into the CEO role about a year ago I Express my excitement about leading American tower through its next era of growth and evolution.

Steve: And any other statements regarding matters that are not historical facts.

Steve: You should be aware that certain factors may affect us in the future and could cause actual results to differ materially from those expressed in these forward looking statements such.

Steve: We have an exceptional portfolio of assets unmatched operating capabilities.

Steve: What I believe to be one of the most durable businesses catalyzed by ever increasing mobile network demand.

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

Steve: So that will be set forth in our upcoming Form 10-K for the year ended December 31, 2024 and in other filings, we make with the SEC.

Steve: Over the past year activity across our platform as highlighted the criticality of our communications assets and meeting growing demand as carriers in our U S and European markets deployed mid band spectrum assets emerging market players densify <unk> networks and began rolling out <unk> in our core site data center business delivered yet another record year of new leasing.

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.

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

Thanks, Adam Good morning, everyone and thanks for joining the call.

Steve: Original perspective of the <unk> cycle, requiring continued network investments necessary to support coverage has been realized and bolstered with incremental optimism through the next phase of AI, driven demand, which I believe will benefit our towers and data centers and unlock synergistic value between the two at the edge.

Steve: When I stepped into the CEO role about a year ago I Express my excitement about leading American tower to its next era of growth and evolution.

Steve: We have an exceptional portfolio of assets unmatched operating capabilities.

Steve: What I believe to be one of the most durable businesses catalyzed by ever increasing mobile network demand over.

Steve: Last year I also laid out a set of strategic priorities center on balance sheet strength efficiency portfolio quality and capital allocation discipline.

Steve: Over the past year activity across our platform as highlighted the criticality of our communications assets, leading growing demand as carriers in our U S and European markets deployed mid band spectrum assets emerging market players diversified <unk> networks and began rolling out five G and of course like data center business delivered yet another record year of new wins.

All meant to further enhance our customer value proposition and strengthen the durability and quality of earnings for our shareholders over the long term.

Steve: Certain headwinds in 2024 underscore the importance of these initiatives, which better prepares to weather challenges like care consolidation and FX and interest rate volatility.

Steve: My original perspective, as a <unk>. It's like will require continued network investments necessary to support coverage has been realized and bolstered with incremental optimism through the next phase of AI, driven demand, which I believe will benefit our towers and data centers and unlock synergistic value between the two at the edge.

Steve: Although these global risks persist thanks to significant efforts undertaken by the talented members of our global team. We're entering 2025 in a stronger position and we will remain focused on pursuing these strategies to prioritize higher quality earnings and sustained growth.

Steve: We're currently on track to maintain our five times leverage target on a recurring basis. This year, which is an acceleration from our initial deleveraging plan following our <unk> acquisition at the end of 2021 and.

Steve: Last year I also laid out a set of strategic priorities center on balance sheet strength efficiency portfolio quality capital allocation discipline.

Steve: All meant to further enhance our customer value proposition and strengthen the durability and quality of earnings for our shareholders over the long term.

Steve: In addition to managing our debt capital structure, our net leverage profile was further supported by margin expansion, which we've largely delivered through systematic reduction of recurring SG&A costs cash SG&A, excluding bad debt reduced by approximately $35 million in 2024 as compared to 2023 supported by various efficiency initiatives.

Steve: Certain headwinds in 2024 underscored the importance of these initiatives, which better prepares to weather challenges like care consolidation and FX and interest rate volatility.

Steve: Although these global risks persist thanks to significant efforts undertaken by the talented members of our global team. We're entering 2025 in a stronger position and we will remain focused on pursuing these strategies to prioritize higher quality earnings and sustained growth.

Steve: Including the thoughtful globalization of companywide functions like finance.

Steve: And HR.

Steve: Most recently, we appointed <unk> as our Chief operating officer, a role that will advance our efforts in driving efficiency and margin expansion I assure you that we effectively leveraged global operating expertise and apply the best of our processes tools and capabilities across all of our regions.

Steve: We're currently on track to maintain our five times leverage target on a recurring basis. This year, which is an acceleration from our initial deleveraging plan. Paul there are of course that acquisition at the end of 2021. In addition to managing our debt and capital structure. Our net leverage profile was further supported by margin expansion, which we've largely delivered through systematic reduction of recurring <unk>.

Steve: At the same time, we were happy to further leverage our exceptional bench strength and announced which Rossi who spent over 20 years with American tower to lead the U S and Canada business importantly, with these changes we aimed to further elevate the quality of business functions of customer service and anticipate further enhancing our already attractive margin profile along the way.

Speaker Change: Hey costs.

Speaker Change: SG&A, excluding bad debt reduced by approximately $35 million in 2024 as compared to 2023 supported by various efficiency initiatives, including the thoughtful globalization of companywide functions like finance.

Steve: We'll use the next several months to diligently assess the optimal global operating structure and in time, we'll communicate long term efficiency targets.

Speaker Change: And HR.

Most recently, we appointed Buttonholes, our chief operating officer, a role that will advance our efforts in driving efficiency and margin expansion I assure you that we effectively leverage global operating expertise and apply the best of our processes tools and capabilities across all of our regions.

Steve: We've already made significant progress we have a long runway of opportunities still ahead.

Steve: Over the past year, we continue to actively manage our global portfolio of forward looking capital deployment priorities to rightsize geographic risk and ensure strong synergistic fit between our strategy core competencies and assets most notably as we discussed on our third quarter call. We exited our India business that is central to our modest land interest in Australia.

Speaker Change: At the same time, we were happy to further leverage our exceptional bench strength announced which Rossi who spent over 20 years with American tower to lead the U S and Canada business importantly, with these changes we aim to further elevate the quality of business functions of customer service and anticipate further enhancing our already attractive margin profile along the way.

New Zealand we.

Steve: We also recently signed an agreement to divest our South African fiber business and plan to close that transaction this quarter.

Steve: We believe the quality of our earnings growth profile is that a material premium to where we stood only a few years ago. In 2025, we expect our developed markets, which consists of our U S Canadian and European operations, along with core site to contribute about 75% towards our Unlevered <unk>.

Speaker Change: What is the next several months to diligently assess the optimal global operating structure at that time, we'll communicate long term efficiency targets.

Speaker Change: We've already made significant progress we have a long runway of opportunity still ahead.

Speaker Change: Over the past year, we continue to actively manage our global portfolio of forward looking capital deployment priorities to rightsize geographic risk and ensure a strong synergistic fit between our strategy core competencies and assets most notably as we discussed on the third quarter call. We exited our India business and has since sold or modest land interest in Australia.

Steve: And we expect to further expand this portion through continued prioritization of capital because of these developed segments.

Steve: We've also increased the proportion of global tower cash flows derived from top operators in each market.

Steve: <unk> reduced emerging market exposure of this should translate to a more attractive and predictable return profile moving forward.

Speaker Change: New Zealand.

Steve: Our strong portfolio and focus capital allocation plan paired with our best in class global operating capabilities and alignment with market leaders better enables us to benefit from positive industry trends.

Speaker Change: We also recently signed an agreement to divest herself I hope the fiber business and plan to close that transaction this quarter.

Speaker Change: We believe the quality of our earnings and ROE profile is that a material premium to where we stood only a few years ago.

Steve: Demand for mobile data continues to decline.

Speaker Change: 2025, we expect our developed markets, which consists of our U S Canadian and European operations, along with core site to contribute about 75% towards our Unlevered <unk> and we expect to further expand this portion through continued prioritization of capital to get these developed segments.

Steve: The $1, 35% of mobile data traffic that runs over <unk> networks today is expected to increase to 80% by 2030, prompting carriers to enhance and expand their increasingly stressed networks currently with five G upgrades of spectral efficiency and subsequently with incremental cell sites will densify their footprint in the areas identified as needing additional capacity.

Speaker Change: We've also increased proportion of global tower cash flows off the top operators in each market.

Steve: <unk>.

Steve: And our U S tower business, we've observed four quarters of sequential acceleration application activity over the course of 2024 exiting the year with our big three customers, having upgraded an average of 65% of our sites within our portfolio with mid band spectrum up from just over 50% a year ago.

Speaker Change: With reduced emerging market exposure and this should translate to a more attractive and predictable return profile moving forward.

Speaker Change: Our Florida portfolio and focus capital allocation plan paired with our best in class global operating capabilities and alignment with market leaders better enables us to benefit from positive industry trends.

Steve: Carriers have begun to highlight the commercial benefits associated with <unk> investments translate to enhance network quality customer retention and strong markets with commentary, suggesting another active year of network investment in 2025 in fact, although we are between the two peaks of the <unk> investment cycle coverage and capacity the 2020 outlook for.

Speaker Change: Global demand for mobile data continues to climb.

Speaker Change: The $1 35 per cent of mobile data traffic that runs over five <unk> networks today is expected to increase to 80% by 'twenty 30 pumping carriers to enhance and expand their increasingly stressed networks currently with five G upgrades, a spectral efficiency and subsequently with incremental cell sites or densify their footprints areas identified as needing additional capacity.

Wireless Capex spend is expected to return to higher levels again totaling approximately $35 billion.

Speaker Change: <unk>.

Speaker Change: And our U S tower business, we've observed four quarters of sequential acceleration application activity over the course of 2024 exiting the year with our big three customers, having upgraded an average of 65% of their sites within our portfolio with mid band spectrum up from just over 50% a year ago.

Steve: Which is roughly $5 billion above the average annual spend during <unk>.

Steve: Now as Ron I'll speak about in a moment, although we anticipate the positive momentum in U S activity to continue into 2025 with a solid pipeline supporting our outlook for organic tenant billings growth in the U S and Canada steps down modestly compared to 2024.

Speaker Change: Carriers have begun to highlight the commercial benefits associated with the <unk> investments translate to enhance network quality customer retention and stronger orchids with commentary, suggesting another active year of network investment in 2025.

Steve: This is a function of the cadence of our contracted use fees and also the commencement timing associated with non contracted new business, such as new co locations outside of our MLA or a customer that may not be under the comprehensive agreement not a softening in demand.

Speaker Change: That although were between the two peaks with LNG investment cycle coverage and capacity. The 2025 outlook for wireless Capex spend is expected to return to higher levels again totaling approximately $35 billion, which is roughly $5 billion above the average annual spending for G.

Steve: So far the <unk> investment cycle is largely in line with our expectations with recent carrier commentary dialog and activity further reinforcing our conviction and sustained higher capex needs moving forward.

Now as Ron will speak about in a moment, although we anticipate the positive momentum in U S activity to continue into 2025 with a solid pipeline supporting it.

Steve: Over the next five years underwritten by projected total mobile network traffic growth of over 15% annually given the existing service terms.

Steve: We expect the required network capacity to more than double with more connected devices data intensive applications and growing up in transmission requirements, we're placing significant starting in the networks.

Speaker Change: For organic tenant billings growth in the USA, Canada steps down modestly compared to 2024.

Speaker Change: This is a function of the cadence of our contracted use fees and also the commencement timing associated with non contracted new business, such as new co locations outside of our MLA or a customer that may not be under the comprehensive agreement modest softening in demand.

Steve: Today, we'd expect roughly half of this incremental capacity needs to be solved through current spectrum holdings and realized spectral efficiency.

Steve: That leaves us sizable capacity gap that can only be resolved through densification additional spectrum coming to market or combination of both.

Speaker Change: So far the <unk> investment cycle is largely in line with our expectations with recent carrier commentary dialog and activity further reinforcing our conviction in sustained higher capex needs moving forward.

Steve: In addition, mainstream use of new applications, such as multimodal AI could further exacerbate capacity shortages and prompt even more activity.

Speaker Change: Over the next five years underwritten by projected total mobile network profit growth of over 15% annually given the existing service terms, we expect the required network capacity to more than double with more connected devices data intensive applications and growing up in transmission requirements, when placing significant strain in the networks.

Steve: Taken altogether, we see an attractive addressable market the portfolio is well equipped to accommodate with equipment upgrades co locations and selective new site development over the next several years and beyond.

Steve: Similar trends generally hold true internationally, where true <unk> mid band coverage continues to progress each year and stands at roughly 45% in Europe, 15% in Latin America, and 10% in Africa.

Speaker Change: Today, we'd expect roughly half of this incremental capacity would need to be solved through current spectrum holdings and real spectral efficiency.

Steve: Data consumption is growing at a CAGR of around mid teens, roughly 20% across these regions 2020, and we've seen a corresponding increase in cell site density that complements existing site upgrade efforts.

Speaker Change: That leaves a sizable capacity gap that can only be resolved through densification additional spectrum coming to market or combination of both.

Speaker Change: In addition, mainstream use of new applications, such as multimodal AI could further exacerbate capacity shortages and prompt even more activity.

Steve: Accordingly, these mid band coverage stats illustrate the need for continued investment over the next several years.

We anticipate similar annual data growth across the same geographies carriers will continue to utilize the most cost effective ways to bolster our network capacity and coverage, which will include a mix of macro towers rooftop sites small cells and in remote areas, where terrestrial networks are not economically efficient satellites.

Speaker Change: Taken altogether, we see an attractive addressable market there are portfolios work with to accommodate with equipment upgrades co location and selective new site development over the next several years and beyond.

Speaker Change: Similar trends generally hold true internationally or true five G. Mid band coverage continues to progress each year and stands at roughly 45% in Europe, 15% in Latin America, and 10% in Africa.

Steve: And our core site business the team delivered a tremendous quarter results rather than another exceptional year. These.

Steve: These results reinforce the strength of the demand and pricing to ability for interconnection centric retail oriented co location.

Speaker Change: Data consumption is growing at a CAGR of around mid teens, roughly 20% across these regions 2020, and we've seen a corresponding increase in cell site density that complements existing site upgrade efforts importantly, these mid band coverage that illustrate the need for continued investment over the next several years.

Steve: While we continue to evaluate Hyperscale, we remain convinced of our core business model and a tangible demand catalyst, we see today, including AI related demand. This allows us to stay disciplined in our lease up approach to ensure a high quality customer mix at the right economics.

Speaker Change: As we anticipate similar annual database across the same geographies carriers will continue to utilize the most cost effective ways to bolster their network capacity and coverage, which will include a mix of macro towers rooftop sites small cells and in remote areas, where terrestrial networks are not economically efficient satellites.

Steve: Our continued long term expectation of mid teens or higher stabilized yields.

Steve: To build on this momentum in 2025 and beyond and continue to meet the growing needs of our customers across our global platform, we will maintain the following priorities.

Speaker Change: And our core site business the team delivered a tremendous quarter results Dorado. Another exceptional year. These results reinforced the strength of the demand and pricing durability interconnection centric retail oriented co location.

Steve: First we continue to evolve our value proposition to our customers and our investment opportunity to our shareholders I firmly believe that we're their best operate our towers and distribute a real estate in the world, which allows us to pass along certain benefits and efficiencies to our customers, including powers of service security and monitoring data and asset quality customers.

Speaker Change: While we continue to evaluate Hyperscale, we remain convinced of our core business model and a tangible demand catalyst, we see today, including AI related demand. This allows us to stay disciplined in our leasable approach to ensure a high quality customer mix at the right economics and supports our continued long term expectation of mid teens or higher stabilized.

Steve: Service delivery speed of deployment and a suite of services capabilities.

Steve: Additionally, I recognize that investor attraction to American tower's equity option requires that we operate the highest quality portfolio with strategic fit among our geographies.

Speaker Change: Yes.

Speaker Change: To build on this momentum in 2025 and beyond and continue to meet the growing needs of our customers across our global platform, we will maintain the following priorities.

Steve: Demonstrate trustworthy stewardship of shareholder capital through disciplined investments and leverage and operating structure that yields outsized efficiencies margins and returns we have an incredibly talented team that lets us do that and further globalizing our organization will drive additional economies of scale.

Speaker Change: First we continue to evolve our value proposition to our customers and our investment opportunity to our shareholders I firmly believe that we're the best operate our towers and distribute a real estate in the world, which allows us to pass along certain benefits and efficiencies to our customers, including powers of service security and monitoring data and asset quality customer.

Steve: <unk> and global automation raw savings across multiple business functions, ensuring that we're able to continue demonstrating synergistic value creation across our 20, plus market and an exciting time in global connectivity.

Speaker Change: Service delivery speed of deployment and a suite of services capabilities.

Steve: Next and as Ron will discuss in more detail. We will continue to actively manage our capital to prioritize funding of opportunities that yield the most attractive risk adjusted rates of return over the long term.

Speaker Change: Additionally, I recognize that investor attraction to American tower's equity option requires that we operate at the highest quality portfolio with strategic fit among our geographies.

Steve: We're continuing to direct most discretionary capital towards our developed market platforms, including over $600 million for data center development on existing campuses underwritten at mid teen stabilized yields.

Speaker Change: Demonstrate trustworthy stewardship of shareholder capital through disciplined investments and leverage and operating structure that yield outsized efficiencies margins and returns we have an incredibly talented team that lets us do that and further globalize our organization will drive additional economies of scale.

Steve: With some optionality to pursue small tuck in inorganic opportunities where appropriate.

Steve: And also the construction of six of our tower sites in Europe, where we anticipate low double digit day one yields.

Speaker Change: Centralization and global automation Ross savings across multiple business functions, ensuring that we're able to continue demonstrating synergistic value creation across our 20, plus market and an exciting time in global connectivity.

Steve: At the same time, we're reducing emerging market discretionary capex to just over $300 million in 2025, a reduction of over 60% from 2021 and over 15% compared to 2024.

Speaker Change: Next and as Ron will discuss in more detail. We will continue to actively manage our capital to prioritize funding of opportunities that yield the most attractive risk adjusted rates of return over the long term.

Steve: Spend across our Latin American African apex segments will be primarily focused on the construction of about 650 previously committed tower sites for strategic customers underwritten at mid teens day, one NOI yields we expect this number to come down over time, as we satisfy those commitments and redirect new discretionary capital to develop regions.

Speaker Change: We're continuing to direct most discretionary capital towards our developed market platforms, including over $600 million for data center development in existing campuses underwritten at mid teens stabilized yields with some optionality to pursue small tuck in inorganic opportunities where appropriate.

Steve: In conclusion macroeconomic uncertainty persists across the global landscape, the consumer demand for connectivity and bandwidth intensive applications and the associated network requirements remain resilient the.

Speaker Change: And also the construction of 600 tower sites in Europe, we anticipate low double digit day one yields.

Speaker Change: At the same time, while reducing emerging market discretionary capex to just over $300 million in 2025, a reduction of over 60% from 2021 and over 15% compared to 2024.

Steve: The macro tower remains the most cost effective manner to deliver gigabyte mobile data in our global portfolio of assets and leading capabilities exceptionally equips us to support our customers' multi year investment needs.

Speaker Change: Spend across our Latin American African APAC segment will be primarily focused on the construction of about 650 previously committed tower sites for strategic customers underwritten at mid teens day, one NOI yields we expect this number to come down overtime as we satisfy those commitments and redirect new discretionary capital to developed regions.

Steve: Further we have taken appropriate steps to ensure a higher degree of durable growth and returns.

Steve: And rated by a leading business.

Steve: Im confident that our focus on operating actively managing highest quality global portfolio of assets offering best in class customer service and delivery through our experienced global teams.

Steve: Bridging our investment grade balance sheet position American tower to profit from attractive long term secular demand trends across the wireless and technology industries and drive sustained quality growth and returns for our shareholders over the long term.

Speaker Change: In conclusion macroeconomic uncertainty persists across the global landscape of consumer demand for connectivity and bandwidth intensive applications and the associated network requirements remain resilient the.

Steve: Now I'll turn it over to Rod to discuss full year 2004 results and our 2025 outlook.

Speaker Change: The macro tower remains the most cost effective manner to deliver gigabyte mobile data a global portfolio of assets and leading capabilities exceptionally equips us to support our customers' multiyear investment needs.

Steve: <unk>.

Rod: Thanks, Steve and thank you all for joining the call. We had a strong close to 2024 supported by the execution of our strategic priorities as Steve highlighted in his remarks before I review, our 2024 performance, which was in line with prior outlook and expectations for 2025, I will touch on several.

Speaker Change: Further we've taken appropriate steps to ensure a higher degree of durable growth and returns.

Speaker Change: A rated by a leading business.

Speaker Change: I'm confident that our focus on operating and actively managing the highest quality global portfolio of assets offering best in class customer service and delivery to our experienced global team leveraging our investment grade balance sheet position American tower to profit from attractive long term secular demand trends across the wireless and technology industries and drive sustained quality growth and returns for our.

Steve: Highlights from the quarter.

Steve: First demand for our assets remained solid in the U S. While fixed use fees in our comprehensive master lease agreements, meaning net new business growth is somewhat independent of actual carrier activity levels. We were encouraged to see the sequential acceleration in applications continue through Q4.

Speaker Change: Shareholders over the long term.

Speaker Change: Now I'll turn it over to Rod to discuss full year 'twenty four result, our 2025 outlook Rob.

Rod Smith: Thanks, Steve and thank you all for joining the call. We had a strong close to 2024 supported by the execution of our strategic priorities as Steve highlighted in his remarks before I review, our 2024 performance, which was in line with prior outlook and expectations for 2025 I'll touch on several highly.

Steve: We view this has critical evidence of the importance of mid band spectrum, and our customers' commitment to achieving portfolio coverage in fact Q4 volumes more than doubled year over year reinforcing our conviction that our customers will continue to deploy <unk> on their existing sites and densify their networks over the next several years.

Speaker Change: It's from the quarter.

Steve: To meet surging data demands.

Speaker Change: First demand for our assets remains solid in the U S. While fixed use fees in our comprehensive master lease agreements mean net new business growth is somewhat independent of actual carrier activity levels. We were encouraged to see the sequential acceleration in applications continue through Q4.

Steve: Internationally consistent organic new business contributions were complemented by the construction of nearly 1000 sites with strategic anchor tenants, which includes record volumes in Europe.

Steve: In our U S data center business demand for our interconnection campuses and associated new leasing remained elevated resulting in fourth quarter revenue growth of nearly 10%.

Speaker Change: We view this has critical evidence of the importance of mid band spectrum in our customers' commitment to achieving portfolio coverage in fact Q4 volumes more than doubled year over year reinforcing our conviction that our customers will continue to deploy <unk> on their existing sites and densify their networks over the next several year.

Next consistent with past quarters conversion of consolidated cash topline growth was bolstered by vigilant cost management supporting year over year cash adjusted EBITDA margin expansion of over 200 basis points.

Steve: As I'll touch on in a moment, our focus on driving cost efficiencies across our global business remains a critical priority and evident in our 2025 outlook.

Years to meet surging data demands.

Speaker Change: Internationally consistent organic new business contributions were complemented by the construction of nearly 1000 sites with strategic anchor tenants.

Steve: Finally, we continued to strengthen our investment grade balance sheet in Q4, we opportunistically address a portion of our 2025 debt refinancing needs successfully issuing $1 $2 billion in senior unsecured notes at an average coupon of five 2% and average tenor of seven five years.

Speaker Change: This includes record volumes in Europe.

Speaker Change: In our U S data center business demand for our interconnection campuses and associated new leasing remained elevated resulting in fourth quarter revenue growth of nearly 10%.

Speaker Change: Next consistent with past quarters conversion of consolidated cash topline growth was bolstered by vigilant cost management supporting year over year cash adjusted EBITDA margin expansion of over 200 basis points.

Steve: Furthermore, our 2025 plan is in line with our net leverage target.

Steve: We began the year with a strong liquidity position and reduced floating rate debt exposure, providing flexibility and optionality as we address 2025 maturities also in January we amended and extended our bank facilities with a leading banking syndicate, which improved our applicable margin pricing by 12 five basis points.

Speaker Change: As I will touch on in a moment, our focus on driving cost efficiencies across our global business remains a critical priority and evident in our 2025 outlook.

Speaker Change: Finally, we continued to strengthen our investment grade balance sheet in Q4, we opportunistically addressed a portion of our 2025 debt refinancing needs successfully issuing $1 $2 billion in senior unsecured notes at an average coupon of five 2% and average tenor of seven five years.

Steve: On drawn debt to 100 basis points further optimizing our cost of capital.

Steve: Moving to slide six ill first remind you that property revenue and adjusted EBITDA exclude discontinued operations associated with our India sales in both the current and prior year periods.

Furthermore, our 2025 plan is in line with our net leverage target and we began the year with a strong liquidity position and reduced floating rate debt exposure, providing flexibility and optionality as we address 2025 maturities also in January we amended and extended our bank facilities with a leading <unk>.

Steve: Property revenue growth for the year was nearly 1% and 3% on an FX neutral basis performance was supported by organic tenant billings growth of over 5%. The construction of nearly 2400 sites and use data center growth of over 10%, partially offset by a 2% negative headwind associated.

Banking syndicate, which improved our applicable margin pricing by 12, five basis points undrawn debt to 100 basis points further optimizing our cost of capital.

Steve: With a reduction in noncash straight line revenue.

Steve: Adjusted EBITDA growth was approximately 2% and over 4% on an FX neutral basis growth was negatively impacted by three 5% associated with a reduction in noncash straight line.

Speaker Change: Moving to slide six I'll first remind you that property revenue and adjusted EBITDA exclude discontinued operations associated with our India sales in both the current and prior year periods.

Steve: As we have communicated throughout the year focus on cost management supported a reduction in cash SG&A, excluding bad debt of approximately $35 million as compared to 2023 contributing to cash margin expansion of 140 basis points to 66, 8% demonstrating our commitment to <unk>.

Speaker Change: Property revenue growth for the year was nearly 1% and 3% on an FX neutral basis performance was supported by organic tenant billings growth of over 5%. The construction of nearly 2400 sites and use data center growth of over 10%, partially offset by a 2% negative headwind associated.

Steve: Diving efficiency throughout our global organization finally attributable <unk> per share of $10 54.

Speaker Change: With a reduction in noncash straight line revenue.

Speaker Change: Adjusted EBITDA growth was approximately 2% and over 4% on an FX neutral basis growth was negatively impacted by three 5% associated with a reduction in noncash straight line.

Steve: Represented nearly 7% growth year over year and over 9% on an FX neutral basis.

Steve: I will summarize a few key points and themes to contextualize, our 2025 outlook.

Steve: The drivers supporting our plan are generally consistent with the preliminary indications we provided on our Q3 2024 earnings call as Youll see on slide seven solid recurring revenue growth with elevated conversion rates to <unk> through strategic global cost management initiatives spanning operating expenses.

Speaker Change: As we have communicated throughout the year focus on cost management supported a reduction in cash SG&A, excluding bad debt of approximately $35 million as compared to 2023 contributing to cash margin expansion of 140 basis points to 66, 8% demonstrating our commitment to.

Steve: SG&A maintenance Capex and cash taxes fundamentally position, our 2025 plant in line with our long term growth algorithm, partially offset by FX devaluation and interest cost associated with refinancing needs.

Speaker Change: Driving efficiency throughout our global organization finally attributable <unk> per share of $10 54 reps.

Speaker Change: Represented nearly 7% growth year over year and over 9% on an FX neutral basis.

Speaker Change: I'll now summarize a few key points and themes to contextualize, our 2025 outlook.

Steve: Although FX and interest rates have proven to be volatile and unique considerations could move results above or below our mid to high single digit growth rate target in any given year. We believe our business is positioned to deliver solid durable reoccurring <unk> per share growth and attractive returns and we're committed to actively managing the portfolio.

Speaker Change: First the drivers supporting our plan are generally consistent with the preliminary indications we provided on our Q3 2024 earnings call as Youll see on slide seven solid recurring revenue growth with elevated conversion rates to <unk> through strategic global cost management initiatives spanning operating expenses.

Steve: To ensure that expectation is achieved.

Steve: Next as Steve mentioned, we recently signed an agreement to sell our fiber assets in South Africa, which we assume to close on March one and our outlook.

Speaker Change: SG&A maintenance Capex and cash taxes fundamentally position, our 2025 plant in line with our long term growth algorithm, partially offset by FX devaluation in interest costs associated with refinancing needs.

Steve: Highlighting another step towards enhancing our portfolio quality and focus annualized contributions from the South Africa fiber business, where approximately $25 million and $20 million in property revenue and adjusted EBITDA, respectively.

Speaker Change: Although FX and interest rates have proven to be volatile and unique considerations could move results above or below our mid to high single digit growth rate target in any given year. We believe our business is positioned to deliver solid durable reoccurring <unk> per share growth and attractive returns and we're committed to actively managing the portfolio.

Steve: Turning to slide eight our 2025 outlook reflects total company organic tenant billings growth of approximately 5% and around five 5% absent the impacts of the final tranche of sprint churn.

Speaker Change: To ensure that expectation is achieved next.

Steve: Organic tenant billings growth in the U S and Canada is expected to be greater than or equal to four 3% and greater than or equal to five 3%. Excluding the impacts of sprint churn a modest reduction compared to 2024 as contracted use fee step down and contributions from non contracted <unk>.

Speaker Change: As Steve mentioned, we recently signed an agreement to sell our fiber assets in South Africa, which we assume to close on March 1st in our outlook.

Speaker Change: Lighting, another step towards enhancing our portfolio quality and focus annualized contributions from the South Africa fiber business, where approximately $25 million and $20 million in property revenue and adjusted EBITDA, respectively.

Steve: <unk>, which is sensitive to commencement timing begin to accelerate.

Steve: Growth includes contributions from organic new business in the mid 3% range and a 3% escalator, partially offset by non sprint related churn and other adjustments of roughly 1%.

Speaker Change: Turning to slide eight our 2025 outlook reflects total company organic tenant billings growth of approximately 5% and around five 5% absent the impacts of the final tranche of sprint churn.

Steve: It is important to note that our guide assumes the first three quarters of 2025 will be impacted by approximately 140 basis points of sprint churn.

Speaker Change: Organic tenant billings growth in the U S and Canada is expected to be greater than or equal to four 3% and greater than or equal to five 3%. Excluding the impacts of sprint churn a modest reduction compared to 2024 as contracted use fees stepped down and contributions from non contracted lease.

Steve: Likely keeping growth below 4% during that time period before recovering to over five 5% in Q4, which will not have any negative growth impacts from sprint churn.

Steve: Growth in Africa, and APAC of approximately 12% includes roughly 7% and escalators, 6% inorganic new business as ongoing <unk> Densification and initial five G upgrades continue in less than 1% and other billings adjustments, partially offset by approximately 2% in churn.

Speaker Change: <unk>, which is sensitive to commencement timing begin to accelerate growth.

Speaker Change: Growth includes contributions from organic new business in the mid 3% range and a 3% escalator, partially offset by non sprint related churn and other adjustments of roughly 1%.

Speaker Change: It's important to note that our guide assumes the first three quarters of 2025 will be impacted by approximately 140 basis points of sprint churn.

Steve: Which is a notable improvement from prior years.

Steve: Growth in Europe of approximately 5% includes 2% and escalators and steady organic new business contributions of around 4%, partially offset by churn of approximately 1%.

Speaker Change: Likely keeping growth below 4% during that time period before recovering to over five 5% in Q4, which will not have any negative growth impacts from sprint churn.

Steve: In Latin America growth of approximately 2% includes contributions from escalators of around 5% and organic new business of over 2% gross growth is partially offset by another year of carrier consolidation driven churn, which we expect to persist through 2027, resulting in elevated churn.

Speaker Change: Growth in Africa, and APAC of approximately 12% includes roughly 7% and escalators, 6% inorganic new business as ongoing <unk> Densification and initial five G upgrades continue in less than 1% in other billings adjustments, partially offset by approximately 2% in churn which is.

Steve: Approximately 5% in 2025, and other billing adjustments of less than 1%.

Speaker Change: A notable improvement from prior years.

Steve: Turning to slide nine Youll see organic tenant billings is supporting property revenue growth of over 5% or approximately 3% on an FX neutral basis, which is impacted by a year over year FX neutral reduction of $217 million in straight line revenue and over 2% negative headwind.

Speaker Change: Growth in Europe of approximately 5% includes 2% and escalators and steady organic new business contributions of around 4%, partially offset by churn of approximately 1% in.

Speaker Change: In Latin America growth of approximately 2% includes contributions from escalators of around 5% and organic new business of over 2% gross growth is partially offset by another year of carrier consolidation driven churn, which we expect to persist through 2027, resulting in elevated churn of <unk>.

Steve: To reported growth.

Complementing organic tower growth net of a reduction due to the non recurrence of certain one time revenue benefits in 2024 is a continuation of solid performance in our U S data center business growing at nearly 12% at the midpoint.

Speaker Change: Proximately, 5% in 2025, and other billing adjustments of less than 1%.

Steve: Moving to slide 10 cash property revenue growth is converting at a high rate to adjusted EBITDA, representing year over year growth of approximately 1% and over 3% on an FX neutral basis, which includes an approximately 3% negative headwind associated with noncash straight line.

Speaker Change: Turning to slide nine Youll see organic tenant billings is supporting property revenue growth of over <unk>, 5% or approximately 3% on an FX neutral basis, which is impacted by a year over year FX neutral reduction of $217 million in straight line revenue.

Steve: Complementing property contributions we anticipate the positive momentum we saw in our U S services segment in 2024 to continue into 2025, resulting in an increase to services gross margin of nearly $30 million the operating leverage inherent in our business model is expected to be amplified by.

Speaker Change: And over 2% negative headwind to reported growth comps.

Speaker Change: Complementing organic tower growth net of a reduction due to the non recurrence of certain one time revenue benefits in 2024 is a continuation of solid performance in our U S datacenter business growing at nearly 12% at the midpoint.

Steve: Prudent cost controls and lower bad debt expense, including another year of cash SG&A declines of approximately $20 million.

Speaker Change: Moving to slide 10 cash property revenue growth is converting at a high rate to adjusted EBITDA, representing year over year growth of approximately 1% and over 3% on an FX neutral basis, which includes an approximately 3% negative headwind associated with noncash straight line.

Steve: Turning to slide 11, 2025 attributable <unk> per share of $10 40.

Steve: Represents growth of over 4% relative to 2024 attributable <unk> per share as adjusted of $9 96.

Speaker Change: Complementing property contributions we anticipate the positive momentum we saw in our U S services segment in 2024 to continue into 2025, resulting in an increase to services gross margin of nearly $30 million the operating leverage inherent in our business model is expected to be amplified.

Steve: And growth of approximately 7% on an FX neutral basis perf.

Steve: Performance is supported by a strong conversion of cash adjusted EBITDA growth through tightly managed cash taxes and maintenance capex, partially offset by net interest headwinds of $80 million, a roughly one 7% negative impact to growth.

Speaker Change: Prudent cost controls and lower bad debt expense, including another year of cash SG&A declines of approximately $20 million.

Steve: On Slide 12, I'll review, our capital allocation plans for 2025.

Speaker Change: Turning to slide 11, 2025 attributable <unk> per share of $10 40.

Steve: We expect to resume dividend growth in the mid single digit range subject to board approval, which corresponds to an approximately $3 2 billion distribution to our shareholders.

Speaker Change: <unk> represents growth of over 4% relative to 2024 attributable <unk> per share as adjusted of $9 96.

Steve: Next we're planning for $1 7 billion in capital deployments of which one $5 billion is discretionary in nature and includes the construction of 2250 sites at the midpoint.

Speaker Change: And growth of approximately 7% on an FX neutral basis.

Speaker Change: Performance is supported by a strong conversion of cash adjusted EBITDA growth through tightly managed cash taxes and maintenance capex, partially offset by net interest headwinds of $80 million, a roughly one 7% negative impact to growth.

Steve: Approximately 80% of our discretionary spend is centered on our developed market platforms, including over $600 million success based investments towards our data center campuses to replenish the record level of capacity sold over the past several years increased spend in the U S primarily towards.

Speaker Change: On Slide 12, I'll review, our capital allocation plans for 2025.

Speaker Change: We expect to resume dividend growth in the mid single digit range subject to board approval, which corresponds to an approximately $3 2 billion dollar distribution to our shareholders.

Steve: Land buyouts under our tower sites and continued acceleration in European New tower construction with 600, new sites planned.

Speaker Change: Next we're planning for $1 $7 billion in capital deployment of which one $5 billion is discretionary in nature and includes the construction of 2250 sites at the midpoint.

Steve: While overall capital spend is moderately increasing year to year as we execute on attractive development opportunities across the U S. Europe and core site, we continued to reduce spend across our emerging markets in 2025 investments in Latin America Africa, and APAC will primarily consist of augmenting.

Speaker Change: Approximately 80% of our discretionary spend is centered on our developed market platforms, including over $600 million in success based investments towards our data center campuses to replenish the record level of capacity sold over the past several years increased spend in the U S primarily towards.

Steve: Sites to accommodate incremental tenants in meeting multiyear agreement obligations with leading carriers, primarily through new builds.

Steve: Execution of our strategic balance sheet priority since closing the core site acquisition.

Speaker Change: Land buyouts under our tower sites and continued acceleration in European New tower construction with 600, new sites planned.

Steve: Has us well positioned to deliver more sustained and durable earnings growth, partially mitigate market risk and volatility and provide financial flexibility to execute on opportunistic and strategic growth opportunities and an attractive cost of capital our liquidity.

Speaker Change: While overall capital spend is moderately increasing year to year as we execute on attractive development opportunities across the U S. Europe and core site, we continued to reduce spend across our emerging markets in 2025 investments in Latin America Africa, and APAC will primarily consist of augmenting.

Steve: <unk> position of $12 billion, including $10 million of bank facility capacity, along with our low floating debt exposure provides optionality to manage the $3 $7 billion of fix note maturities in 2025, our plan continues to target maintaining floating rate debt exposure below 10%.

Speaker Change: Sites to accommodate incremental tenants in meeting multiyear agreement obligations with leading carriers, primarily through new builds.

Steve: <unk>, which we believe is a reasonable target for the foreseeable future.

Speaker Change: Execution of our strategic balance sheet priority since closing the Cortina acquisition has us well positioned to deliver a more sustained and durable earnings growth, partially mitigate market risk and volatility and provide financial flexibility to execute on opportunistic and strategic growth opportunities and an attractive cost of capital.

Steve: Moving to slide 13, and in summary, our fundamental business proved resilient throughout a volatile macroeconomic backdrop in 2024 as carriers continue to invest in their networks across our global footprint to address growing mobile data demand, although market volatility continues to persist, including interest rate and FX uncertainty.

Speaker Change: Our liquidity position of $12 billion, including $10 billion of bank facility capacity, along with our low floating debt exposure provides optionality to manage the $3 $7 billion of fixed note maturities in 2025, our plan continues to target maintaining floating rate debt exposure.

Steve: The quality of our assets people Counterparties and contract terms combined with the strategic steps, we executed over the course of 2024 to strengthen our balance sheet and enhance earnings quality has.

Steve: <unk> is well positioned to deliver stronger growth and returns for our shareholders over the long term.

Speaker Change: Below 10%, which we believe is a reasonable target for the foreseeable future.

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

Speaker Change: Moving to slide 13, and in summary, our fundamental business proved resilient throughout a volatile macroeconomic backdrop in 'twenty 'twenty four as carriers continue to invest in their networks across our global foot to address growing mobile data demand, although market volatility continues to persist, including interest rate and FX uncertainty.

Speaker Change: Thank you, ladies and gentlemen, if you'd like to ask a question. Please press. One then zero on your telephone keypad you may withdraw your question at any time by repeating the one zero command if youre using a speakerphone. Please pick up the handset before pressing the numbers. Once again, if you have a question. Please press one then zero at this time and one moment. Please for your first question.

Speaker Change: The quality of our assets people Counterparties and contract terms combined with the strategic steps, we executed over the course of 'twenty 'twenty four to strengthen our balance sheet and enhance earnings quality have us well positioned to deliver stronger growth and returns for our shareholders over the long term.

Operator: Your first question comes from the line of Michael Rollins from Citi. Please go ahead.

Michael Rollins: Thanks, and good morning, first can you give us some additional details on what youre seeing in the domestic leasing environment, including the mix of Colo versus amendments and as that mix affecting kind of the book to bill.

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

Speaker Change: Thank you, ladies and gentlemen, if you'd like to ask a question. Please press one linzer on your telephone keypad you may withdraw your question at any time by repeating the one zero command if youre using a speakerphone. Please pick up the handset before pressing the numbers. Once again, if you have a question. Please press one zero at this time and one moment. Please for your first question.

Operator: Four.

Operator: The Otp G metrics over the course of 'twenty five and then just.

Ladies and.

Operator: And to the point about domestic leasing opportunities and can you give us an update on the multiyear growth opportunity and do you still see annual growth in the mid single digit range going through 2027.

Speaker Change: Sure.

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

Michael Rollins: Thanks, and good morning, first can you give us some additional details on what you're seeing in the domestic leasing environment.

Speaker Change: Yeah. Thanks for the question Mike.

Speaker Change: Yes, we don't we're not changing our long term guidance in terms of what we believe.

Michael Rollins: Including a mix of Colo versus amendments and as that mix affecting kind of the book to bill.

Speaker Change: The average to be from that 2023 through 2027 time period.

Speaker Change: When we look at this year's <unk> in particular, there is a little bit of a mix but.

Michael Rollins: For the.

It's a little bit more nuance than just colo versus amendments, we do have a sequential step down in our contracted use right fee under our comprehensive agreements.

Michael Rollins: Oh TPG metrics over the course of 'twenty five and then just.

Michael Rollins: Maybe second and to the point about domestic leasing opportunities and can you give us an update on the multi year growth opportunity and do you still see annual growth in the mid single digit range going through 2027. Thanks.

Speaker Change: We told you guys when we laid out the guidance we had more visibility early in that process. It gets a little bit less each year.

Speaker Change: Our organic tenant billings growth.

Speaker Change: A factor of those use fees plus the incremental amendments and new leases that are outside of those those contracted use fees.

Speaker Change: Yeah. Thanks for the question Mike.

Speaker Change: Yes, we don't we're not changing our long term guidance in terms of what we believe.

Speaker Change: We do still have one customer that's not on a comprehensive agreement with respect to amendments and we also have co locations that are outside of the comfort reduce fees with some other customers as well and.

Speaker Change: The average to be from that 2023 through 2027 time period.

Speaker Change: When we look at this year's Oh TPG in particular, there is a little bit of a mix, but it's a little bit more nuanced than just colors versus amendments. We didn't have a sequential step down in our contracted use where I see under our comprehensive agreements.

Speaker Change: So what we're seeing from an activity level. There is a robust pipeline from all of our carriers, it's kind of broad based across the three national carriers.

Speaker Change: There's still a healthy mix of amendments and co locations. We are seeing a rise in new co locations across the portfolio.

Speaker Change: We've told you guys. When you laid out the guidance, we had more visibility early in that process. It gets a little bit less each year and so our organic tenant billings growth.

Speaker Change: It's a combination.

Speaker Change: Continuing to extend the reach of the network so going into some more rural areas, but also some early stage densification that we're seeing so we are seeing that that mix change a little bit when you look at the 2025 guide.

Speaker Change: Factor of those use fees plus the incremental amendments and new leases that are outside of those those contracted use fees. So we do still have one customer that's not on a comprehensive agreement with respect to the amendments and we also have co locations that are outside of the country reduce fees with some other customers as well.

Speaker Change: Cause less of that.

Speaker Change: Revenue as part of the comprehensive use fees, we are more subject to timing on that and we do see a little bit more of a delay in the signing of commencing a those those usage fees tend to be kind of front end loaded in the year and as a result.

Speaker Change: What we're seeing from an activity level. There is a robust pipeline from all of our carriers is kind of broad based across the three national carriers.

Speaker Change: And that there's still a healthy mix of amendments and co locations. We are seeing a rise in new co locations across the portfolio.

Speaker Change: Kind of throughout the year and the OTB achieve metric is so sensitive to kind of in your revenue piece that even at 30, 60, 90 day delay and come in.

Speaker Change: That's a combination.

Instruments can make a difference there.

Speaker Change: Continuing to extend the reach of the network so going into some more rural areas, but also some early stage densification that we're seeing so we are seeing that that mix change a little bit when you look at the 2025 guide.

Speaker Change: So that's why it's a little bit weird.

Speaker Change: Giving us quite a number of giving a greater than or equal to four three.

Speaker Change: And we will see what the commencement timing is on that but that is a combination of the amendments from the customer that are outside of the agreement and the co locations that does extend the kind of a book to bill timeline out just a little bit.

Speaker Change: Because less of that.

Speaker Change: Revenue as part of the comprehensive use fees, we are more subject to timing on that and we do see a little bit more of a delay.

Michael Rollins: Hey, Michael.

Michael Rollins: Maybe I'll just add a point here that roughly four three that Steve talked about.

Speaker Change: The signing of commencing a those strike fees tend to be kind of front end loaded in the year.

Michael Rollins: In terms of organic tenant billings growth for the U S. Thats in line with our prior expectation and does fit in and support our full year.

Speaker Change: What kind of kind of throughout the year and that OTB geometric is so sensitive to kind of in your revenue piece that you know even at 30 60 90 days delay in Commencements can make a difference there.

Michael Rollins: Outlook for 2024, as well as that longer term multiyear guide that we've provided earlier, which was roughly 5% organic tenant billings growth in the U S. On average from 2017 out to 2024. So we are pretty well on track with that and the other thing I would highlight is within that.

Speaker Change: So that's why it's a little bit, we're not giving us quite a member or giving a greater than or equal to $4 three.

Speaker Change: We'll see what the commencement timing is on that but that is a combination of the amendments from the customer that are outside of the agreement and the co locations that does extend the kind of a book to bill timeline out just a little bit.

Michael Rollins: Equal to or greater than four 3% includes two percentage points contributed from churn.

Speaker Change: Yeah.

Michael Rollins: Hey, Michael.

Maybe I'll just add a point here that roughly 4.3 that Steve talked about.

Michael Rollins: Half of that is from sprint churn, which will not be reoccurring next year.

Michael Rollins: It will be an inflection point, where that number is certainly is expected to be higher going into next year.

Michael Rollins: In terms of organic tenant billings growth for the U S. That's in line with our prior expectation and does fit in and support our full year.

Michael Rollins: To clarify that guidance 2023 and 2027.

Michael Rollins: Outlook for 2024, as well as that longer term multiyear guide that we provided earlier, which was roughly 5% organic tenant billings growth in the U S. On average from 2017 up to 2024. So we are pretty well on track with that and the other thing I would highlight is within that.

Great.

Michael Rollins: Thank you.

Your next question comes from the line of Simon Flannery from Morgan Stanley. Please go ahead.

Great. Thank you very much good morning.

Speaker Change: Steve if I could come back to the data center business great to see the strong performance. There just wanted to get a sense of how the original concept of the integration of.

Michael Rollins: Equal to or greater than 4.3% includes two percentage points contributed from churn roughly half of that is from sprint churn, which will not be reoccurring next year. So that will be an inflection point, where that number is certainly is expected to be higher going into next year just to clarify that got it was 2023%.

Speaker Change: The data center connectivity the towers AI and for instance, so forth how are you thinking about that today and I guess one of the concerns as we got this massive multiple gap between data centers on towers and are you getting full recognition for the assets that you hold Kevin.

Michael Rollins: 27.

Michael Rollins: Oh great.

Speaker Change: The predominance of the tower business, So I'd love to get your thoughts about or is it worth owning this versus separating bad and then I think there was a reference rod maybe two more money on U S. Land purchases can you just give us a sense of what's driving that how are you thinking about the economics now that's leading you to lean into that this year. Thanks.

Michael Rollins: Thank you.

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

Simon Flannery: Great. Thank you very much good morning, Steve.

Simon Flannery: Steve if I could come back to the data center business great to see the strong performance. There just wanted to get a sense of how the original concept of the integration of.

Speaker Change: Yeah. Thanks for the question Simon.

Speaker Change: So we're very happy with the performance of core site and how it's doing is it's kind of a standalone business as you mentioned in the original <unk>.

Simon Flannery: The data center connectivity the towers AI and for instance, so forth how are you thinking about that today and I guess one of the concerns as we got this massive multiple got between data centers and towers and are you getting full recognition for the assets that you hold given.

Speaker Change: We bought core site strategically was number one we knew it was a good business and number two we thought it would give us an advantage.

Speaker Change: Industry does move to edge compute we still believe there'll be a convergence of kind of a wireless.

Simon Flannery: The predominance of the tower business, So I'd love to get your thoughts about or is it worth owning this versus separating bad and then I think there was a reference rod maybe two more money on U S. Land purchases can you just give us a sense of what's driving that how are you thinking about the economics now that's leading you to lean into that this year. Thanks.

Speaker Change: As well as the wireline edge and.

Speaker Change: We still work.

Our conviction that that will happen.

Speaker Change: In the meantime, we're focused on maximizing the value of foresight. So when we think about whether we're the right owner of that asset as long as we're maximizing the value of that asset. We think it makes sense for us to hold it and to continue to grow it because we do believe that that long term strategy will play out.

Speaker Change: Yeah. Thanks for the question Simon.

Speaker Change: So we're very happy with the performance of course light and how it's doing is kind of a standalone business.

Speaker Change: For some reason it looks like that doesn't play hours saw a strategic fit we'll reassess that when the time comes but at this point everything that we're seeing leads us to believe that you will continue to see an evolution of yards and we believe having that interconnection ecosystem.

Speaker Change: As you mentioned in the original.

Speaker Change: The reason, we bought porcine strategically was number one we knew it was a good business and number two we thought it would give us an advantage when we are in.

Speaker Change: History does move to edge compute we still believe there'll be a convergence of kind of the wireless edge as well as the wireline edge and we still work.

Speaker Change: So I was just having a data center company, but it is having a highly interconnected ecosystem with multi cloud environments.

Speaker Change: Strong conviction that that will happen.

Speaker Change: It's going to be essential for edge to work and that's also what we're already seeing.

Speaker Change: In the meantime, we're focused on maximizing the value of foresight. So when we think about you know whether we're the right owner of that asset as long as we're maximizing the value of that asset. We think it makes sense for us to hold it and to continue to grow it because we do believe that that long term strategy will play out.

Speaker Change: Well in terms of AI does multi cloud environments are also the ideal places for inferencing for AI. So there's this whole ecosystem evolves over time.

Speaker Change: We are well placed to capture that demand as it evolves.

For some reason it looks like that that doesn't play hours on a strategic fit we'll reassess that and when the time comes.

Speaker Change: So we believe that we are the right owner for that asset as we continue to maximize its value and evolve the future offering out there, but like I said, we'll continue to assess it and a great point.

Speaker Change: At this point everything that we're seeing leads us to believe that you will continue to see an evolution of yards and we believe having that interconnection ecosystem.

Speaker Change: Somebody else can create more value than we can make that assessment at that time.

Speaker Change: It's not just having a data center company, but it is having a highly interconnected ecosystem with multi cloud environments.

Speaker Change: Hey, Simon Good morning, I think your second question you had was around land purchases under our towers in the U S.

Speaker Change: What's going to be essential for edge to work.

Speaker Change: You can see in the numbers that we put out for the guide for 'twenty five we are driving that up to about 200 million.

Speaker Change: And that's also what we're already.

Speaker Change: In terms of AI does multi cloud environments are also the ideal places for inferencing for AI. So there's this whole ecosystem evolves over time, we think we're well placed to capture that demand as it evolves and so we believe that we are the right owner for that asset as we continue to maximize its value.

Speaker Change: $200 million invested in 24 that was about 144, so a nice inflection point, there and at a higher level of investment.

Speaker Change: Key there is.

Speaker Change: A couple of things that I would highlight one is we're very selective in terms of which parcels of land, we purchased and we look to purchase land under our very best towers to secure the revenue over the long term to either expand we certainly look to extend those leases out 2030 years and also by them or get perpetual easements win.

Speaker Change: That's kind of a future offering out there, but like I said, we'll continue to assess it and if at any point.

Speaker Change: Somebody else can create more value than we can make that assessment at that time.

Simon Flannery: Hey, Simon Good morning, I think the second question you had was around land purchases under our towers in the U S.

Speaker Change: And where we can so one of the metrics that you've heard us talk about in the past is that.

Speaker Change: The percentage of land or percentage of towers, where we have long term security on the land that we've got that up to north of up in the high <unk> at this point, that's partly through the execution of extending leases, but also purchasing these leases and not only does the purchase of the land under the tower.

Speaker Change: And you can see in the numbers that we put out for the guide for 'twenty five we are driving that up to about 200.

Speaker Change: $200 million invested in 24 that was about 144, so nice.

Speaker Change: One point, there and at a higher level.

Speaker Change: Investments the key there is a couple of things that I would highlight one is we're very selective in terms of which parcels of land, we purchased and we look to purchase land under our very best towers to secure the revenue over the long term to either extend we certainly look to extend those leases out 2030 years.

Speaker Change: Secure the future revenue and cash flow of the tower. It's also a great use of capital in terms of the outright returns we get returns to that.

Speaker Change: Followed Bob our hurdle rates in the U S and again, we can be pretty selective in terms of which towers and where the returns are so all in all it's a great use of capital and helps drive growth secure revenue in it.

Speaker Change: And also by them or get perpetual easement, when and where we can so one of the metrics that you've heard us talk about in the past is.

Speaker Change: The percentage of land or percentage of towers, where we have long term security on the land that we've got that up no.

Speaker Change: And it gives us.

Speaker Change: <unk>.

Speaker Change: Okay. Thank you.

Speaker Change: Yes.

Speaker Change: Up in the high Seventy's at this point, that's partly through the execution of extending leases, but also purchasing these leases and not only does the purchase of the land under the towers.

Speaker Change: Your next question comes from the line of <unk> Levi from UBS. Please go ahead.

Speaker Change: Great. Thank you.

Speaker Change: Couple of follow ups on the domestic activity I think you mentioned, 65% of towers in the U S have been upgraded what does that metric look like for the carriers that are outside of the comprehensive deal.

Speaker Change: Secure the future revenue and cash flow of the tower. It's also a great use of capital in terms of the outright returns we get returns that.

Speaker Change: Maybe in terms of the pacing new leasing pacing for the year I think you mentioned mid <unk>, so about $170 million versus the 180, we saw last year.

Speaker Change: Yes.

Speaker Change: Above our hurdle rates in the U S and again, we can be pretty selective in terms of which towers and where the returns are so all in all it's a great use of capital it helps drive growth secure revenue in it.

Speaker Change: How should we think about the cadence throughout the year.

Speaker Change: One final question if I could.

Speaker Change: And it gives them.

Speaker Change: On capital allocation with leverage inside your target now and dividend growth potentially starting how do we think about buybacks. Thank you.

Speaker Change: <unk>.

Speaker Change: Okay. Thank you.

Speaker Change: Yeah.

Speaker Change: Your next question comes from the line of <unk> Levi from UBS. Please go ahead.

Speaker Change: Great. Thank you a couple of follow ups on the domestic activity I think you mentioned, 65% of towers in the U S have been upgraded what does that metric look like for the carriers that are outside of the comprehensive deal and.

Speaker Change: Okay I'll take the.

Speaker Change: The first one.

Speaker Change: And so when you think about the carrier activity I don't want to get too specific because my customers get Mad at me about that but I'll just kind of reiterate that we have one customer thats.

Speaker Change: Maybe in terms of the pacing new leasing pacing for the year I think you mentioned mid threes, So about 170 million versus the 180, we saw last year.

Speaker Change: In mid band <unk> on over 80% of one customer that's about 65% and one that's still a little bit under half.

Speaker Change: I think with some of their public statements you guys can probably figure out who those are.

Speaker Change: How should we think about the cadence through the year and one final question, if I could on capital allocation with leverage inside your target now and dividend growth potentially starting how do we think about buybacks. Thank you.

Speaker Change: In terms of the timing.

Speaker Change: Timing for the new business throughout the year I think was your second question.

Speaker Change: As we think about that cadence.

Fact of the sprint churn is probably the biggest factor that will change the cadence on that so the last tranche of sprint churn hit in October of 2024, So that will weigh on the TPG metric for the first three quarters.

Speaker Change: Yeah.

Speaker Change: Okay I'll take the first one.

Speaker Change: And so when you think about the carrier activity I don't want to get too specific because when our customers get mad at me about that but I'll just kind of reiterate that we have one customer that upgrade.

Speaker Change: You should expect those three quarters to have.

Speaker Change: Lower growth because its way down by that churn.

Speaker Change: Coming out to a higher growth rate on the back end of that in terms of the activity cadence we are exiting 2024.

Speaker Change: Mid band five G on over 80% one customer that's about 65% and one that's still a little bit under half.

For fourth quarter.

Speaker Change: I think with some of their public statements you guys can probably figure out who those are.

Speaker Change: The sequential growth, we expect 2025, it would be roughly the same volume of applications on our site.

Speaker Change: In terms of the debt.

Speaker Change: Yes, I think we think it may be a little bit more front end loaded this time, but it's really hard to tell exactly what cadence that's going to be in terms of when the applications come in because the carriers are still finalizing their plans. So we'll see.

Speaker Change: Timing is for the new business throughout the year I think was your second question.

Speaker Change: As we think about that cadence.

Speaker Change: Fact of the sprint churn is probably the biggest factor that will change the cadence on that so the last tranche of sprint churn hit in October of 2024, So that will weigh on the TPG metric for the first three quarters.

Speaker Change: How that works out but the early indications is last year it ramped up through the first half of the back there might be a slight rash.

Speaker Change: Ramp down this year, but it's too early to know for sure how that's going to pan out.

Speaker Change: You should expect those three quarters to have.

Speaker Change: Lower growth because its way down by that churn coming out to a higher growth rate on the back end of that in terms of the activity cadence we are exiting 2024.

Speaker Change: And vacuum maybe I would just add a couple of things one is in that in the <unk> and.

Speaker Change: In the U S of course, we do have spring churn the timing of that is it will it will impact the organic tenant billings numbers over the first three quarters and then it will be absent in Q4, so the churn numbers. The raw numbers, we're looking at about $98 million to $100 million of.

Speaker Change: Four quarters of sequential growth, we expect 2025, it would be roughly the same volume of applications on our sites.

Speaker Change: And I think we think it maybe a little bit more front end loaded this time, but it's really hard to tell exactly what cadence that's going to be in terms of when the applications come in because the carriers are still finalizing their plans. So we'll see how that works out but the early indications as you know last year. It ramped up through the first half of the back there might be a slight.

Speaker Change: Churn to revenue in 2025, we're going to start off the year at roughly a run rate of about $30 million a quarter of churn and that includes sprint churn sprint churn is a little more than half of it is about 140 basis points over those first three quarters, and then that churn number in Q4.

Speaker Change: Ramp down this year, but it's too early to know for sure how that's going to pan out.

Yeah, maybe I'll just add a couple of things one is in that in the.

Speaker Change: <unk> reduced down to about $10 million or so.

Speaker Change: In the U S of course, we do have sprint churn the timing of that is it'll it'll impact the organic tenant billings numbers over the first three quarters and then it will be absent in Q4, so the churn numbers. The raw numbers, we're looking at about 98 or $100 million of.

Speaker Change: And the buyback.

Speaker Change: And then on the new business piece Youre right, we had about $180 million of new business and 24, that's gone down to about 165 in that range $1 70.

Speaker Change: Right in that range, so and we do see although we do see a dip as Steve talks about from the end of last year going into Q1 and two we do think there is an acceleration modest acceleration that could be seen at the end of the year. When it comes to buybacks we are.

Speaker Change: Churned revenue in 2025, we're going to start off the year at roughly a run rate of about $30 million a quarter of churn and that includes sprint churn sprint churn is a little more than half of it is about 140 basis points over those first three quarters, and then that churn number in Q4.

Speaker Change: We are at about five one times leverage at the end of 2024. Our view is that we will be at or below five times early in 2025 that certainly returns us to full financial flexibility.

Speaker Change: Reduced down to about $10 million or so.

Speaker Change: And the buyback.

Speaker Change: And then on the new business piece Youre right, we had about $180 million of new business and 24, that's gone down to about $1 65 in that range $1 70.

Speaker Change: So leverage would not be a kind of an overweight consideration as we as we move forward now with that said.

Speaker Change: Have to continue to look at interest rates that continues to be uncertainty in the macroeconomic backdrop and with rates.

Speaker Change: You know right in that range, so and we do see although we do see a dip as Steve talks about from the end of last year going into Q1, and two we do think there's an acceleration modest acceleration that could be seen at the end of the year. When it comes to buybacks we are.

Speaker Change: With the rate environment, so depending on where rates go and what the outlook is we'll make decisions on capital allocation. We could certainly delever further if we think that is in the best interest of our shareholders because of uncertainty around rates, but otherwise, we see very constructive ways to deploy growth capital in the developed markets clearing.

Speaker Change: We are at about five one times leverage at the end of 2024. Our view is that we will be at or below five times early in 2025, that's certainly returns us to full financial flexibility.

Speaker Change: The hurdle rates getting very good long term growth and value creation.

Speaker Change: We also will be looking at other ways to supplement that and that could be through M&A or buybacks. We'll look at both will be very disciplined in the measure there will be driving shareholder value over the long term. So I would say we're definitely open to share buybacks were open to allocating capital over the next several years, we will have.

Speaker Change: So leverage would not be a kind of an overweight consideration as we as we move forward now with that said we.

Speaker Change: Have to continue to look at interest rates that continues to be uncertainty in the macroeconomic backdrop and with rates.

Speaker Change: With the rate environment, so depending on where rates go and what the outlook is we'll make decisions on capital allocation. We could certainly delever further if we think that is in the best interest of our shareholders because of uncertainty around rates, but otherwise, we see very constructive ways to deploy our grow.

Speaker Change: Capital generation in the business that we will have the ability to deploy and we will be using all the tools available to us to create maximum value for shareholders over the long term.

Speaker Change: Great. Thank you.

Speaker Change: <unk> capital in the developed markets clearing the hurdle rates getting very good long term growth and value creation.

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

Ric Prentiss: Thanks, Good morning, everybody.

Speaker Change: We also will be looking at other ways to supplement that and that could be through M&A or buybacks. We'll look at both will be very disciplined in the measure there will be driving shareholder value over the long term. So I would say we're definitely open to share buybacks were open to allocating capital over the next several years, we will have.

Ric Prentiss: Good morning questions for you.

Speaker Change: First of all on my my friend Simon Who's So we're going to Miss you man.

Ric Prentiss: Following Simon's questions on the on the datacenter side.

Ric Prentiss: What kind of yields are you getting on the over $600 million on the data centers.

Ric Prentiss: And then when if when how does AI effect towers, we're all trying to figure out how that might play out and then I have one more.

Speaker Change: Capital generation in the business that we will have the ability to deploy and we will be using all the tools available to us to create maximum value for shareholders over the long term.

Speaker Change: Thanks, Rick.

Speaker Change: So all of our development of course life is being underwritten at mid teens stabilized yields and Thats a number that they were able to achieve as a standalone company and we have certainly not diminished any of the underwriting standards for that over time as we've owned them.

Speaker Change: Great. Thank you.

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

Speaker Change: Thanks, Good morning, everybody.

Speaker Change: Two questions for you.

Speaker Change: Yes.

Speaker Change: First of all on my my friend Simon Who's So we're going to Miss you man.

Speaker Change: Essentially the opportunity to do better than that if we outperform the business case on those but everything is being underwritten with that.

Speaker Change: Totally simons questions on the on the datacenter side.

Speaker Change: We think that's a really good places to deploy capital.

Speaker Change: What kind of yields are you getting on the over $600 million on the data centers.

Speaker Change: When it comes to AI on towers, I think it's it's hard to predict exactly when you're going to see it. If you look at how AI is developing.

Speaker Change: And then when if when and how does AI effect towers, we're all trying to figure out how that might play out and then I have one more.

Speaker Change: Yes.

Speaker Change: The time gap between you do something on your desktop and when you do it on your phone is pretty much disappeared people like to be able to do things in the mobile world like they can't under desk. So as you see these is.

Speaker Change: Thanks, Rick.

Speaker Change: So all of our development of course life is being underwritten at mid teens stabilized yields and that's a number that they were able to achieve as a standalone company and we have certainly not diminished any of the underwriting standards for that over time as we've owned them.

Speaker Change: Different activities evolving the way I think about it is what's going to be bandwidth intensive if youre interacting with AI on your phone today, it's largely taxed or still photograph and those are not huge bandwidth hogs. So it really comes down to video I'm really encouraged by what I'm seeing kind of evolving in the AI space Open AI has launched Sara to your kind of a slow.

Speaker Change: Yes.

Speaker Change: Potentially opportunities to do better than that if we outperform the business case on those but everything is being underwritten with that so again, we think that's a really good place to deploy capital.

Speaker Change: When it comes to AI on towers, I think it's it's hard to predict exactly when you're going to see it. If you look at how AI is developing.

Speaker Change: Group of people that hasn't been broadly released yet, but when that becomes more mainstream that'll put bandwidth Google or else are the year to Adobe announced Firefly. So youre starting to see these video applications being launched.

Speaker Change: Yes.

Speaker Change: The time gap between you do something on your desktop and when you do it on your phone is pretty much disappeared people like to be able to do things in the mobile world like the cat on her desk. So as you see these differ.

Speaker Change: As those become more widespread use more widespread and more widespread fashion.

Speaker Change: That will start making its way into mobile phones that will be more bandwidth intensive that'll put stress on the networks and so I do think that the incremental use case of AI is going to be a factor and requiring more densification of networks over time. The question is when are we all creating videos on our votes.

Speaker Change: Different activities evolving the way I think about it is what's going to be bandwidth intensive if you're interacting with AI on your phone today, it's largely taxed or still photograph and those are not huge bandwidth hogs. So it really comes down to video I'm really encouraged by what I'm seeing kind of evolving in the AI space Open AI has launched Sara to your kind of a slow.

Speaker Change: No.

Speaker Change: Okay, and sorry April Bachelors question Deborah.

The people that hasn't been broadly released yet, but when that becomes more mainstream that'll put bandwidth, a google or elsewhere to Adobe announced Firefly, So you're starting to see these video applications being launched.

Speaker Change: Rob.

Speaker Change: Sorry, Rick I'll, just add a couple of comments here briefly around the data center.

<unk>, it's Steve made so as you know we've seen accelerating revenue growth in the data center business, we're up to double digit growth here along with that certainly.

Speaker Change: As those become more widespread use more widespread and more widespread fashion.

Speaker Change: <unk>.

Speaker Change: Some pretty good pricing power on our side. The demand backdrop is really strong that is driving our average monthly reoccurring rent per cab up so thats gone up a couple of hundred dollars in the last couple of years. That's evidence of the strong pricing that we're able to drive in.

Speaker Change: We will start making its way to the mobile phone that'll be more bandwidth intensive that'll put stress on the networks and so I do think that the incremental use cases of AI is going to be a factor and requiring more densification of networks over time. The question is when are we all creating videos on their phones.

Speaker Change: We're in a position to be very selective in terms of who's coming into the spaces and making sure that they fit into that ecosystem.

Speaker Change: There's no sense.

Speaker Change: Okay and particle bachelors question, Rob sorry.

Speaker Change: Which is interconnecting.

Speaker Change: Sorry, Rick I'll, just add a couple of comments here briefly around the data center.

Speaker Change: Connecting with other enterprise customers connecting into the cloud connecting into to the networks that we have in there. The other thing that I would highlight is the modest increases in capex you've seen over the last couple of years, we see that directly driving up our backlog and in our backlog now is at an all time high of north of $80 million and that's going to sustain.

Speaker Change: Comments that Steve made so as you know we've seen accelerating revenue growth in the data center business, we're up to double digit growth here along with that certainly.

Speaker Change: Comes.

Speaker Change: Some some pretty good pricing power on our side the demand backdrop is really strong and that is driving our average monthly recurring rent per cab app. So that's gone up a couple of hundred dollars in the last couple of years. That's evidence of the strong pricing that we're able to drive in.

Speaker Change: <unk> solid revenue growth over the next couple of years, so that that business is really well positioned performing very well and is in line to continue to perform well for the foreseeable future and the other thing I would say is the increases that youre seeing in the capital in the data center business.

Speaker Change: We're in a position to be very selective in terms of who's coming into the the spaces and making sure that they fit into that ecosystem.

Speaker Change: We're also increasing capital in Europe, we're also increasing capital in the U S tower business through the land purchases that Simon asked about and at the same time, we are decreasing capital investments on the development side across Africa, Latam and APAC.

Speaker Change: Which is interconnecting.

Speaker Change: Connecting with other enterprise customers connecting into the cloud connecting into to the networks that we have in there. The other thing that I would highlight is the modest increases in capex you've seen over the last couple of years, we see that directly driving up our backlog and in our backlog now is at an all time high of north of $80 million and that's going to sustain.

Speaker Change: Okay.

Speaker Change: And then on <unk> question, you mentioned that there could be some some other M&A that would fit into the mix on stock buybacks or not.

Speaker Change: <unk> solid revenue growth over the next couple of years, so that that business is really well positioned performing very well and is in line to continue to perform well for the foreseeable future and the other thing I would say is the increases that you're seeing in the capital in the data center business.

Speaker Change: Obviously, you've been saying theres not many portfolios out there that were of interest or value creation to you not putting words in your mouth I don't think there, but anything changing on that dynamic as far as more portfolios coming out are they coming from mobile network operators are they coming from privates that want to exit what are you kind of thinking as far as what might be in that pipeline of potential.

Speaker Change: We're also increasing capital in Europe, we're also increasing capital in the U S tower business through the land purchases that Simon asked about and at the same time, we are decreasing capital investments on the development side across Africa, Latam and APAC.

Speaker Change: <unk> M&A for tower deals yes.

Speaker Change: Yes, there is nothing else that we're seeing out there right now Rick I mean, there's a few portfolios there.

Speaker Change: People are talking about but nothing at this point looks to us to be something where we can create the type of value that we would need to see.

Speaker Change: Okay and then on <unk> question, you mentioned that there could be some some other M&A that would fit into the mix on stock buybacks or not.

Speaker Change: Again to reiterate for us to do something M&A.

Speaker Change: Has to be strategically important to us and one plus one that has to equal three so we've got to think that we can create more value in that portfolio than anybody else. So that's possible, we'll find some small portfolios domestically you were.

Speaker Change: Obviously, you've been thinking theres not many portfolios out there that were of interest or value creation to you not putting words in your mouth I don't think there, but anything changing on that dynamic as far as more portfolios coming out are they coming from mobile network operators are they coming from privates that want to exit what are you kind of thinking as far as what might be in that pipeline of potential.

Speaker Change: Using our teams and what we know.

Speaker Change: Marketing to our customers, we can do a better job than other folks you might see some small portfolios like that.

Speaker Change: <unk> M&A for tower deals yes.

Speaker Change: But at the end of the day.

Speaker Change: It's got to be better than a stock buyback for us to do M&A.

Speaker Change: Yes, there is nothing else that we're seeing out there right now Rick I mean, there's a few portfolios.

Speaker Change: It will be a.

Speaker Change: Holding the teams to a pretty high standard before we approve anything.

Speaker Change: People are talking about but nothing at this point it looks to us to be something where we can create the type of value that we would need to see.

Speaker Change: The M&A world So nothing on the horizon right now that we see that would be compelling.

Speaker Change: To reiterate for us to do something M&A. It has to be strategically important to us and one plus one that has to equal three so we've got things that we can create more value in that portfolio than anybody else. So it's possible, we'll find some small portfolios domestically, where we think that using our teams and what we know.

Speaker Change: Great. Thanks for that update I appreciate it.

Speaker Change: Your next question comes from the line of Nick del Deo from Moffett Nathan. Please go ahead.

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

Speaker Change: First Steve you.

Speaker Change: Achieving cost efficiencies has been a real area of focus for you and you've been quite successful on that front over the past couple of years.

Speaker Change: Marketing to our customers, we can do a better job than other folks you might see some small portfolios like that.

Speaker Change: I guess in your prepared remarks, you alluded to sharing long term efficiency targets with us in the future. So I don't need to share anything with us today before you're comfortable doing so but at a high level can you expand on that and maybe kind of tell us about the magnitude of savings you think American tower can potentially achieve on this front over time.

Speaker Change: At the end of the day.

Speaker Change: It's got to be better than a stock buyback for us to do M&A.

Speaker Change: So it will be a.

Speaker Change: Holding the teams to a pretty high standard before we approve anything.

Speaker Change: The M&A world So nothing on the horizon right now that we see that would be compelling.

Speaker Change: Great. Thanks for that update I appreciate it.

Speaker Change: Sure, but I'm, sorry, I'm not going to give you a target yet.

Speaker Change: Your next question comes from the line of Nick del Deo from Moffett Nathan. Please go ahead.

Speaker Change: Do you think about what we've done so far our focus initially was on SG&A as we have changed the focus of many of our markets to harvesting. The cash flows that are there versus aggressively trying to grow those markets that gave us an opportunity to rethink the organization and so that gave us some short term savings those are durable recurring SG&A savings.

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

Speaker Change: First Steve you.

Speaker Change: Achieving cost efficiencies has been a real area of focus for you and you've been quite successful on that front over the past couple of years.

Speaker Change: I guess in your prepared remarks, you alluded to sharing long term efficiency targets with us in the future. So I don't need to share anything with us today before you're comfortable doing so but at a high level can you expand on that and maybe kind of tell us about the magnitude of savings you think American tower can potentially achieve on this front over time.

Speaker Change: Our functions that we either just didn't need to do any more than we could do regionally.

Speaker Change: We've been.

Speaker Change: Globalizing our business for a period of time, we're accelerating that now and one of the reasons that we asked but take the job as CFO was to really look at what kind of benefits can we get across the globe by looking at our core operations.

Speaker Change: Sure, but I'm, sorry, I'm not going to give you a target yet.

Speaker Change: Do you think about what we've done so far our focus initially was on SG&A as we have changed the focus of many of our markets to harvesting. The cash flows that are there versus aggressively trying to grow those markets that gave us an opportunity to rethink the organization and so that gave us some short term savings those are durable recurring SG&A savings.

Speaker Change: As we are growing aggressively globally, we grew at a kind of a decentralized manner.

Speaker Change: And so we weren't getting worse.

Speaker Change: <unk> is focused on being.

Speaker Change: As efficient as possible in every market all the time because were growing so fast and what we've asked Bud to do is take a look at this global operations across that across all of our markets and to try to figure out what's that next level of savings. So again, the SG&A was kind of the that was the first area we're targeting.

Speaker Change: Our functions that we either just didn't need to do any more than we could do regionally.

Speaker Change: We've been.

Speaker Change: Globalizing our business for a period of time, we're accelerating that now and one of the reasons that we asked but take the job as CFO was to really look at what kind of benefits can we get across the globe by looking at our core operations.

Speaker Change: <unk> prepared remarks, we are targeting a bit more savings this year, but the next phase of this is to look at all of our operations and the question is what can we do in terms of our directs what can we do in operations and maintenance utilities supply chain and I just don't have the answer yet, but still running a project to see what that's going to look like.

Speaker Change: As we were growing aggressively globally, we grew at a kind of a decentralized manner.

Speaker Change: And so we weren't getting worse.

Speaker Change: We know that there are some savings out there.

Speaker Change: Where his focus on being.

Speaker Change: As efficient as possible in every market all the time because were growing so fast and what we've asked spud to do is take a look at this global operations.

Speaker Change: Prepared to share a magnitude of that with you yet because we're still sizing it up if I look forward to doing that as soon as I kind of panned out but on this and get our get a clear goal from him on what he is willing to sign up too, but that's something that we'll be sharing with you in the future as we work through those those numbers.

Speaker Change: Across all of our markets and to try to figure out what's that next level of savings. So again that SG&A was kind of the that was the first area we're targeting.

Speaker Change: Hey, Nick maybe I would just add to Steve's comments around SG&A is that the SG&A efficiency that you. So rightfully highlight is is only one piece of the priorities that we laid out a couple years ago. So.

Speaker Change: As Rod mentioned in his prepared remarks, we are targeting a bit more savings this year, but the next phase of this is to look at all of our operations and the question is what can we do in terms of our directs what can we do in operations and maintenance utilities supply chain and I just don't have the answer yet, but still running a project, we'll see what that is going to look like.

Speaker Change: We really were looking at a multiyear and multifaceted set of priorities, which are driving organic growth through the business driving operational efficiency through the business improving our quality of earnings and strengthening the balance sheet. The SG&A piece is certainly evidence of us.

Speaker Change: There are some savings out there not prepared to share a magnitude of that with you yet because we're still sizing it up but I look forward to doing that as soon as I kind of panned out but on this and get our clear goal from him on what he is willing to sign up too, but that's something that we'll be sharing with you in the future as we work through those those numbers.

Speaker Change: Staying focused and executing diligently we've done that across all of these pieces with the sale of our India business. We sold some other smaller businesses like the land that we had down in Australia, We just announced that we're signed an agreement to sell the fiber business down in <unk>.

Speaker Change: Hey, Nick maybe I would just add to Steve's comments around SG&A is that the SG&A efficiency that you. So rightfully highlight is is only one piece of the priorities that we laid out a couple years ago. So.

Speaker Change: In South Africa, and we're looking at a few other smaller things there we've been very focused on driving organic growth and you can see that in the consistency of the numbers that we're that we're putting up with our balance sheet strength, you've seen is kind of rotate the balance sheet, we're now down to about 3% floating rate debt, which really.

Speaker Change: We really were looking at a multiyear a multifaceted set of priorities, which are driving organic growth through the business driving operational efficiency through the business improving our quality of earnings and strengthening the balance sheet. The SG&A piece is certainly evidence of us.

Speaker Change: Insulates us somewhat from the volatility and the uncertainty around rates gives us more certainty, which has been really good and we've also received the S&P upgrade from a credit rating standpoint. So.

Speaker Change: Staying focused and executing diligently we've done that across all of these pieces with the sale of our India business. We sold some other smaller businesses like the land that we had down in Australia. We just announced that were signed an agreement to sell the fiber business down in <unk>.

Speaker Change: SG&A is certainly an important piece of us driving cost down and being efficient and its combined with us executing across the consistent priorities that we laid out a couple of years ago.

Speaker Change: In South Africa, and we're looking at a few other smaller things there we've been very focused on driving organic growth and you can see that in the consistency of the numbers that we're that we're putting up with our balance sheet strength, you've seen this kind of rotate the balance sheet, we're now down to about 3% floating rate debt, which really.

Speaker Change: Okay, great well, thanks for all the color on that front guys.

I guess, one what encore site for you as well historically.

Speaker Change: And when they were public or we'd see the stats by Metro.

Speaker Change: The capacity and the demand was really skewed towards the bay area, La and Northern Virginia.

Speaker Change: Insulates us somewhat from the volatility and the uncertainty around rates gives us more certainty, which has been really good and we've also received the S&P upgrade from a credit rating standpoint. So.

Speaker Change: Have you seen the demand patterns change at all such that it's broadened out across your markets or those three markets continue to garner and kind of a lopsided share of demand.

Speaker Change: SG&A is certainly an important piece of us driving cost down and being efficient and its combined with us executing across the consistent priorities that we laid out a couple of years ago.

Speaker Change: Well certainly those campuses continue to see increased demand, but what we've seen is that ecosystem development that we've worked so hard to do across all of our market.

Speaker Change: It was really paying off so we're seeing in our key markets like Chicago and New York.

Speaker Change: Okay, great well, thanks for all the color on that front guys.

Speaker Change: I guess, one what encore site for you as well historically.

Speaker Change: Those campuses are becoming.

Speaker Change: Just as desirable as what we're seeing in Silicon Valley L. A in northern Virginia. So it really is a testament to the business model, they have where they curate that customer mix, bringing the networks clouds and enterprises and that kind of intersection ecosystem. That's what makes it attractive.

Speaker Change: And when they were public or we'd see the stats by Metro.

Speaker Change: The capacity and the demand was really skewed towards the Bay area L a and northern Virginia.

Speaker Change: Have you seen the demand patterns change at all such that it's broadened out across your markets or those three markets continue to garner it kind of a lopsided share of demand.

Speaker Change: And we are seeing that play out in those markets.

Speaker Change: Why in my prepared remarks, I mentioned and you might see us do small tuck in and organics.

Speaker Change: Well certainly those campuses continue to see increased demand, but what we've seen is that ecosystem development that we've worked so hard to do across all of our market.

Speaker Change: I prefer previously to Miami, where we bought a small data center. What we've asked the team to do is look at new campuses is there a way to expand into other markets to build those over time, just the way we did in Chicago and New York. Most recently, so that you get even more campuses that are performing that way. That's also why we're building.

Speaker Change: It was really paying off so we're seeing in our key markets like Chicago and New York.

Speaker Change: Those campuses are becoming.

Speaker Change: Just as desirable as what we're seeing in Silicon Valley L. A in northern Virginia. So it really is a testament to the business model, they have where they curate that customer mix, bringing in the networks clouds and enterprises and that kind of intersection ecosystem. That's what makes it attractive.

Speaker Change: <unk> three right now in Denver is to try to turn that market into another desirable campus. So we think we've got a good track record of doing that we think there's more opportunities out there and we'll continue to support of course, our team as they are.

Speaker Change: And we are seeing that play out in those markets.

Speaker Change: Create those campuses, but we are seeing a much more balanced slow down to what you saw previously.

Speaker Change: Why in my prepared remarks, I mentioned and you might see us do small tuck it in organics.

Speaker Change: That's great. Thank you.

Speaker Change: I prefer previously to Miami, where we bought a small data center. What we've asked the team to do is look at new campuses is there a way to expand into other markets.

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

Good morning, Thanks for taking my question I was wondering if you could maybe comment on your view of the U S carrier activity relative to fixed wireless access and specifically are you seeing any of your carrier customers devoting new capacity specifically for that purpose as far as you can tell.

Speaker Change: Build those over time, just the way we did in Chicago and New York. Most recently, so that you get even more campuses that are performing that way. That's also why we're building three right now in Denver is to try to turn that market into another desirable campus. So we think we've got a good track record of doing that we think theres more opportune.

Speaker Change: It would be very tough for us to do.

Speaker Change: Peg it specifically to fixed wireless they are still using their existing wireless networks to serve that so we're not seeing.

Speaker Change: That is out there and I will continue to support of course, our team as they are.

Speaker Change: Great those campuses, but we are seeing a much more balanced slow down to what you saw previously.

Speaker Change: A separate network going up for six wireless for fixed wireless.

Speaker Change: That's great. Thank you.

Speaker Change: I think that anything that puts demand on the network makes it more likelihood they're going to add more equipment overtime.

Speaker Change: Yeah.

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

Speaker Change: But that's not something that we can kind of parse out with Steve specifically on that.

Jim Schneider: Good morning, Thanks for taking my question I was wondering if you could maybe comment on your view of the U S carrier activity relative to fixed wireless access.

Speaker Change: If you listen to the carrier commentary they still say they are using furlough capacity in their existing networks, certainly not going to contradict my customers on that but I am encouraged by that raising their targets for the number of customers that are going to be served by a fixed wireless I'm also encouraged by the returns they're able to get on that product and the positive signs in their business.

Jim Schneider: Specifically are you seeing any of your carrier customers devoting new capacity specifically for that purpose as far as you can tell.

Jim Schneider: It would be very tough for us to do.

Jim Schneider: Specifically the fixed wireless they're still using their existing wireless networks to serve that so we're not seeing.

Speaker Change: Some of which is attributable fixed wireless so I think it's generally a boon for the entire industry and I think certainly we will see our piece of that as that business develops over time.

Jim Schneider: A separate network going up for six wireless for fixed wireless.

Jim Schneider: I think that anything that puts demand on the network makes it more likely they're going to add more equipment overtime.

Speaker Change: Thanks, and then maybe as a follow up specifically relative to Europe.

Speaker Change: Adding four.

Jim Schneider: But that's not something that we can kind of parse out with Steve specifically on that if you listen to the carrier commentary they still say, they're using furlough capacity in their existing networks are certainly not going to contradict my customers on that but I am encouraged by them raising their targets for the number of customers that are going to be serve a fixed wireless I've also.

Speaker Change: Do you think 10 buildings with about 5%.

Speaker Change: Is that.

Speaker Change: Is that the right number on a multiyear basis do you believe do you think there is a potential for acceleration there in the out years and then maybe give us your view if you would on any M&A opportunities specifically in that region is that an area, where you'd like to increase your focus or not thank you.

Jim Schneider: Encouraged by the returns are able to get on that product and the positive sides of their business some of which is attributable to fixed wireless. So I think it's generally.

Speaker Change: Thanks.

Speaker Change: In terms of kind of our longer term view of Europe mid single digits is kind of what we see that market being over time. So we think that's a durable.

Jim Schneider: Boon for the entire industry and I think certainly we will see our piece of that as that business develops over time.

Speaker Change: Growth rate for us.

Speaker Change: There are a couple of piece parts of that we do have CPI linked escalators, so that will vary over time.

Speaker Change: Thanks, and then maybe as a follow up specifically relative to Europe, you're guiding for.

Jim Schneider: Organic tenant billings growth of about 5%.

Speaker Change: The inflation, there, but certainly the core business activity is very encouraging what we're seeing there we're seeing a little bit more competition, we're seeing expansion into rural areas that's being.

Speaker Change: Is that does.

Speaker Change: Is that the right number on a multiyear basis do you believe do you think there's a potential for acceleration there in the out years and then maybe give us your view if you would on any M&A opportunities specifically in that region.

Required by the governments they are a bit behind on some of their 2030 targets in terms of the population that they'd like to serve there. So I think that there is an opportunity for them to catch up with that plan. If they keep investing there also if you look at their penetration for mid band <unk>, its lagging a little bit behind the U S.

Speaker Change: Is that an area, where you'd like to increase your focus or not thank you.

Speaker Change: Thanks.

Speaker Change: In terms of kind of our longer term view of Europe mid single digits is kind of what we see that market being over time. So we think that's a durable.

Speaker Change: We all kind of roughly 45% of the population served by <unk> at this point and so I think youll see a continued pace of deployment by those carriers that you are seeing a little bit of carrier consolidation in certain markets there.

Speaker Change: Growth rate for us.

Speaker Change: There are a couple of piece parts of that we do have CPI linked escalators, so that will vary over time.

Speaker Change: So the inflation there, but certainly the core business activity is very encouraging what we're seeing there we're seeing a little bit more competition, we're seeing expansion into rural areas that's being.

Speaker Change: We are across.

Speaker Change: Across the globe as we saw here in the U S.

Speaker Change: But again, we think that they emerge from those situations, maybe fewer carriers, but stronger carriers with more capital is deployed that's probably a good sign for the longer term. So we feel very constructive on Europe as a whole.

Speaker Change: Required by the governments they are a bit behind on some of their 2030 targets in terms of the population they'd like to serve there. So I think that there is an opportunity for them to catch up with that plan. If they keep investing there also if you look at their penetration for mid band five G. Its lagging a little bit behind the U S. I think that there.

Speaker Change: Now when we look at M&A.

Yeah.

Speaker Change: It's certainly a market that we think has potential. The question is can we find the right portfolio with the right terms and conditions and the right price.

Speaker Change: We all kind of roughly 45% of the population served by mid <unk> at this point and so I think you'll see a continued pace of deployment by those carriers now you are seeing a little bit of carrier consolidation in certain markets there.

Speaker Change: We're not going to go.

Speaker Change: Go into a market and just to go into the market, we're not going to buy a portfolio just to get some scale there for us. It comes down to two main components. The first is price and right now everything is targeted in Europe is trading.

Speaker Change: We are across.

Speaker Change: Across the globe as we saw here in the U S.

Trading at a price that.

Speaker Change: But again, we think that they emerge from those situations, maybe fewer carriers, but stronger carriers with more capital to deploy that's probably a good sign for them.

Speaker Change: Those are the sidelines a bit.

Speaker Change: The other aspect is terms and conditions, we are very patient before we pulled the trigger on the telefonica portfolio. Because we saw portfolio is trading what terms and conditions that just werent conducive to long term value creation.

Speaker Change: Longer term, so we feel very constructive on Europe.

Speaker Change: Joel.

Joel: Now when we look at M&A.

Hi.

Speaker Change: And we've enumerated those pass off won't go into a lot of detail on those again, but we don't want portfolio. So that doesn't give us long term durable growth.

Joel: It's certainly a market that we think has potential. The question is can we find the right portfolio with the right terms and conditions and the right price.

Speaker Change: And so even if the price was right we would sit out on those opportunities. So what I'd say about Europe is I'm cautiously optimistic that we might find opportunities to grow there, but there's nothing that we've seen today.

We're not going to.

Joel: Go into a market just to go into a market, we're not going to buy a portfolio just to get some scale there for us. It comes down to two main components. The first is price and right now everything that was targeted in Europe is trading.

Speaker Change: That has been compelling enough for us to really.

Joel: Trading at a price that kept us on the sidelines a bit.

Speaker Change: Kind of get into the weeds on it and we'll continue to be patient and disciplined before we do anything material there.

Joel: The other aspect is terms and conditions, we are very patient before we pull the trigger on the telefonica portfolio. Because we saw portfolio is trading with terms and conditions that just weren't conducive to long term value creation.

Speaker Change: Yes.

Speaker Change: Your next question comes from the line of Richard Choe from Jpmorgan. Please go ahead.

And we've enumerated those in the past or go into a lot of detail on those again, but we don't want portfolios, though that doesn't give us long term durable growth.

Great I wanted to ask about the services business, the 30% growth and the margin contribution can you give us some.

Joel: And so even if the price was right we would sit out on those opportunities. So what I'd say about Europe is we're cautiously optimistic that we might find opportunities to grow there, but there's nothing that we've seen today.

Speaker Change: How that should kind of grow through the year and what youre seeing there and then one follow up.

Ric Prentiss: Yeah, Thanks, Richard so.

Ric Prentiss: We do have a good backlog of projects going into the year. So we do think that we're going to see some nice ramp up in that in.

Joel: Yes.

Joel: Been compelling enough for us to really.

Kind of get into the weeds on it and we'll continue to be patient and disciplined before we do anything material there.

Ric Prentiss: In 2025, it is a combination of a couple of different aspects of the business, though we have our kind of normal.

Joel: Yeah.

Ric Prentiss: Services business, which is tied to it because of just normal deployment, where we're doing some work for the carriers on permitting and things like that but we also have construction services, that's becoming a larger component of that and construction services or something that we don't do nationwide and we don't do it for all the carriers, it's really a very niche thing that we do.

Speaker Change: Your next question comes from the line of Richard Choe from J P. Morgan. Please go ahead.

Richard Choe: Great I wanted to ask about the services business, the 30% growth and the margin contribution.

Richard Choe: A sense of how that should kind of grow through the year and what youre seeing there and then one follow up.

Ric Prentiss: Due for a couple of customers in a couple of markets.

Richard Choe: Yeah, Thanks, Richard so.

Ric Prentiss: We've been able to.

Richard Choe: We do have a good backlog of projects going into the year. So we do think that we're going to see some nice ramp up in that in.

Ric Prentiss: Structure teams in deals there where we can.

Ric Prentiss: Earn a nice margin, but more important to serve our customers well and get them on air on time.

Richard Choe: In 2025, it's a combination of a couple of different aspects of the business, though we have our kind of normal.

So when you look at that guide for next year, there's a little bit more construction there, but overall activity is expected to be up year over year in terms of that.

Richard Choe: Services business, which is tied to it because of just normal deployment or we're doing some work for the carriers on permitting and things like that or soft construction services, that's becoming a larger component of that and construction services or something that we don't do nationwide and we don't do it for all the carriers, it's really a very niche thing that we do.

And so at this point.

Ric Prentiss: We have more visibility into the first half of the year as I've said before it's extremely hard to predict services for the full year, because it's a little bit more variable, but we feel good about the guide we put out and we will continue to monitor it and we'll see what happens in the back half of the year.

Richard Choe: Due for a couple of customers in a couple of markets.

Ric Prentiss: And then in terms of your Canadian business can we get a little bit of color.

Richard Choe: We've been able to.

Richard Choe: Structure teams in deals there where we can.

Ric Prentiss: Things are going there and the desire to get bigger in Canada.

Richard Choe: Earn a nice margin, but more importantly serve our customers well and get them on air on time.

Ric Prentiss: Sure. It's a very small business for us we just have to cut your rollover.

Richard Choe: So when you look at that guide for next year, there's a little bit more construction, there, but overall activity.

Ric Prentiss: A little over a couple of hundred towers, there and it's going well, it's growing well, we're seeing nice activity levels on it.

Richard Choe: As expected to be up year over year in terms of that.

Ric Prentiss: The Canadian market is an interesting market.

Richard Choe: And so at this point.

Ric Prentiss: The carriers have not traditionally monetize their towers, there and so we'll continue to kind of see how that plays out.

Richard Choe: We have more visibility into the first half of the year as I've said before it's extremely hard to predict services for the full year, because it's a little bit more variable, but we feel good about the guide we put out and we will continue to monitor it and we'll see what happens in the back half of the year.

Ric Prentiss: All the developed markets are have some.

Ric Prentiss: Yeah.

Ric Prentiss: Kind of characteristics to them the Canadian market in particular.

Richard Choe: Yes.

Ric Prentiss: A lot of network sharing that's been part of that market throughout its history.

Richard Choe: And then in terms of your Canadian business can we get a little bit of color of how things are going there and the desire to get bigger in Canada.

Ric Prentiss: People building more differentiated networks today, so there is a little bit less sharing actually in some areas in the work before so we'll continue to monitor that but the comments I made for Europe hold true for Canada as well in terms of conditions are extremely important price is extremely important.

Richard Choe: Sure. It's a very small business for us we just have a little.

Richard Choe: A little over a couple of hundred towers, there and it's going well, it's growing well, we're seeing nice activity levels on it.

Richard Choe: The Canadian market is an interesting market.

Ric Prentiss: And you won't see us do anything to get scale, there that doesn't meet those criteria. So there is no strategic reason why we would pay up to get into that market. We'll just evaluate the portfolio for its growth opportunities.

The carriers have not traditionally monetize their towers, there and so we'll continue to kind of see how that plays out.

Richard Choe: All the developed markets are.

Richard Choe: Some.

Ric Prentiss: If we did something there it's because we got the appropriate price and terms of conditions.

Richard Choe: Yeah.

Richard Choe: Kind of characteristics to them the Canadian market in particular.

Ric Prentiss: Got it thank you.

Richard Choe: A lot of network sharing that's been part of that market throughout its history.

Ric Prentiss: Okay.

Richard Choe: Seeing people building more differentiated networks today. So there is a little bit less sharing actually in some areas in the work before so we'll continue to monitor that but the comments I made for Europe hold true for Canada as well in terms of conditions are extremely affordable price is extremely important.

Speaker Change: I'll now turn it back to you for any closing comments.

Speaker Change: Thank you all for joining the call. If you have any follow up questions. Please feel free to reach out to the Investor Relations team. Thanks, everyone.

Speaker Change: 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.

Richard Choe: You won't see us do anything to get scale, there that doesn't meet those criteria. So there is no strategic reason why we would pay up to get into that market. We'll just evaluate the portfolio for its growth opportunities and if we did something there. It's because we got the appropriate price and terms of conditions.

Richard Choe: Got it thank you.

Richard Choe: Okay.

Speaker Change: I'll now turn it back to you for any closing comments.

Speaker Change: Thank you all for joining the call. If you have any follow up questions. Please feel free to reach out to the Investor Relations team. Thanks, everyone.

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

Speaker Change: Yeah.

Speaker Change: We're sorry your conferences ending now please hang up.