American Tower Corp (AMT) — Q3 2025 Earnings Call Transcript

Thank you, and good morning. Welcome to our Third Quarter Earnings Call. I'm Spencer Kurn, Head of Investor Relations for American Tower. Joining me on the call today are Steve Vondran, our President and Chief Executive Officer; and Rod Smith, our Executive Vice President, Chief Financial Officer, and Treasurer. Following our prepared remarks, we will open the call for your questions. Before we begin, I need to call your attention to our safe harbor statement. It says that some of our comments today may be forward-looking. As such, they are subject to risks and uncertainties described in American Tower SEC filings, and results may differ materially. Additional information as well as our earnings materials are available on our Investor Relations website. With that, I'll turn the call over to Steve. Steve?

Thanks, Spencer. Good morning, everyone, and thanks for joining the call. As you can see from our published results, we completed a great quarter that delivered double-digit growth in attributable AFFO per share as adjusted. Leasing activity remained robust across our tower and data center businesses that was complemented by near-record services revenue. These top line trends, combined with focused execution of our strategic initiatives, have enabled us to increase our guidance for the year across all of our key consolidated metrics. At the midpoint of our revised guidance, we now expect to deliver attributable AFFO per share as adjusted, growth of approximately 7%. Net of FX headwinds and financing costs, our outlook implies attributable AFFO per share as adjusted, growth of approximately 9%, which reflects the fundamental strength of our core operating model. Before turning the call over to Rod to review our detailed financial results and updated outlook, I'd like to spend a few minutes discussing the industry backdrop and what it means for American Tower. The past few months have been an interesting and active time in our industry, with spectrum moving between key players and signals of a more consolidated U.S. carrier market. During my 25 years at American Tower, I've navigated many instances of carrier consolidation and spectrum deals, and our experienced team has a strong track record of delivering market-leading solutions that meet the needs of our customers while enhancing our strategic positioning. Although each transaction has been unique, there's been one consistent trend. The tower industry benefits when its customers become healthier. Financially strong customers tend to invest more heavily in their networks to keep pace with demand for mobile data consumption, which in turn drives greater demand for our best-in-class tower portfolio. Demand for mobile data, the backbone of our business model, continues to rise at a torrential pace. In the U.S., the most recent CTIA survey showed that mobile data consumption in 2024 increased approximately 35% year-over-year for the third straight year; driven by growth in mobile customers, 5G-enabled devices, usage per device, and fixed wireless access. To put this into perspective, at this pace, mobile data consumption would continue to double every 2 to 3 years. Experts believe that the rapid growth in mobile data consumption will require a doubling in overall network capacity over the next 5 years, which in turn will require a significant increase in cell sites that benefit our tower business. We, therefore, remain quite optimistic about the opportunities that this industry landscape presents even before considering the likely tailwinds from AI-driven mobile data demand. We're also paying close attention to developments within satellite-based networks. We have a firsthand view through our board representation at AST SpaceMobile and regularly evaluate satellite capabilities with engineers and technology consultants. Our assessments are deeply rooted in data and firmly endorse the view that satellite-based networks will remain complementary to terrestrial towers due to the capacity and economic constraints inherent to the satellite model. And these challenges are only magnified when considering the evolving nature of wireless communication technology as growth in mobile data consumption compounds. In the U.S., this demand continues to drive robust levels of leasing activity. Application volumes in the third quarter remained elevated and heavily weighted towards amendments, but with a growing share of colocations. On average, approximately 75% of our towers have been upgraded with 5G equipment. So there's still considerable runway for growth as carriers complete their 5G coverage rollouts and shift their attention to network quality with densification activity. We also see positive trends across our other tower portfolios, where data consumption has grown at a CAGR of roughly 20% to 25% since 2020. 5G mid-band coverage is still progressing and stands at an average of roughly 50% in Europe, 20% in Latin America, and 10% in Africa, with emerging markets lagging developed markets in cell sites per capita. Our international customers, especially in our emerging markets, continue to invest in 4G and newer 5G networks, and we're well positioned to capture future upside as our less mature markets lease up over time. Strong industry tailwinds also continue to propel our data center business. This quarter, CoreSite signed record retail new leasing revenue and experienced healthy growth in our larger deployments as well, driven by strong demand for hybrid cloud and multi-cloud deployments and positive pricing actions amidst tight supply dynamics. We're also seeing significant new demand from early-stage AI-related workloads like inferencing, machine learning models, and GPU as a Service for neoclouds. It's becoming increasingly important for AI workloads to be co-located with hybrid installations. Our CoreSite facilities are perfectly suited for this as they have a rich ecosystem of network and cloud interconnection, coupled with purpose-built capacity design to support AI and other high-density deployments with features like liquid cooling. All of these positive trends in demand and pricing reinforce our expectation for CoreSite to achieve mid-teens or higher stabilized yields and to achieve these targets faster and with better visibility as pre-leasing and sales pipelines accumulate. I'm confident that American Tower is well positioned to benefit from these demand drivers across our tower and data center businesses. Our portfolio of assets is unmatched in quality, scale, and operational excellence, and we've focused our company around four strategic priorities to optimize long-term value creation, maximize organic growth, expand margins, allocate capital with discipline, and position our balance sheet as an asset. We maximize organic growth as the best operator of towers and distributed real estate in the world. Our contractual and asset management expertise continues to deliver industry-leading organic growth while passing along superior service, operational benefits, and efficiencies to our customers. We expand margins by leveraging our global scale and world-class teams to drive cost efficiency. We've generated approximately 300 basis points of adjusted EBITDA margin expansion since 2020, and we see room for continued expansion as we streamline operations. We look forward to communicating more details on future efficiency initiatives as part of our 2026 outlook presentation during our fourth quarter call. Our capital allocation philosophy optimizes long-term shareholder value creation. After funding our dividend, we evaluate internal uses of CapEx, inorganic opportunities, debt repayments, and share buybacks against each other to drive the highest possible risk-adjusted returns for our business. This approach has recently prioritized developed tower markets and CoreSite to improve the quality of our earnings and durability of growth. And as you saw in our results this morning, it informed our decision to repurchase $28 million of shares since quarter-end. And our balance sheet, with an investment-grade credit rating and leverage now below 5x, which is the lowest among our tower peers, provides a cost of capital advantage and superior financial flexibility to pursue our growth objectives. Taken together, our strategic priorities are designed to deliver our goal of industry-leading AFFO per share growth. Since assuming the CEO role last year, I'm increasingly impressed by my team's ability to execute these priorities and deliver value for all of our stakeholders. I'd like to thank our incredible employees for delivering yet another impressive quarter. I'm confident that our team will continue to expertly manage our best-in-class assets and provide unmatched service for our customers in the future. With that, I'll hand the call over to Rod to discuss our detailed third quarter financial results and updated 2025 outlook. Rod?

Thanks, Steve, and thank you all for joining the call. As you saw in this morning's press release, we delivered another strong quarter and raised our full year outlook. Before diving into our third quarter results and our revised full year outlook, I'll share a few highlights. First, total revenue grew nearly 8% year-over-year, driven by steady consolidated organic growth in the mid-single digits, another strong quarter of U.S. services contribution, and double-digit growth from CoreSite. Second, adjusted EBITDA also grew nearly 8% year-over-year as strong revenue growth was complemented by 20 basis points of cash margin expansion. Third, attributable AFFO per share as adjusted grew approximately 10% year-over-year as strong adjusted EBITDA growth was enhanced by disciplined management of below-the-line costs. Finally, we are raising our full year outlook across property revenue, adjusted EBITDA, attributable AFFO, and AFFO per share. The outlook raise is supported primarily by FX tailwinds, U.S. services outperformance, and net interest benefits as compared to the prior outlook. Our expectations for organic growth and CoreSite revenue growth remain in line with our prior outlook. Now let's dive into our results. Turning to third quarter property revenue and organic tenant billings growth on Slide 5. Consolidated property revenue grew nearly 6% year-over-year. U.S. and Canada property revenue was flat year-over-year and grew approximately 5% when excluding noncash straight-line revenue and Sprint churn. International property revenue grew approximately 12% year-over-year and nearly 8% when excluding noncash straight-line revenue and FX impacts. Finally, data center property revenue grew over 14%, driven by a record quarter of retail new leasing and consistent pricing growth. Moving to the right side of the slide, we delivered consolidated organic tenant billings growth of 5%, in line with expectations, driven by solid demand across our global portfolio. Our U.S. and Canada segment grew approximately 4% organically and greater than 5% when excluding Sprint churn. As a reminder, this was our final quarter of Sprint churn. Organic growth in our International segment was nearly 7%, reflecting double-digit growth in Africa and APAC, steady mid-single-digit growth in Europe, and low single-digit growth in Latin America as expected. Turning to Slide 6. Adjusted EBITDA grew nearly 8% year-over-year as strong revenue growth was enhanced by disciplined cost management. Moving to the right side of the slide, attributable AFFO per share as adjusted grew approximately 10% year-over-year, supported by robust EBITDA growth and prudent management of below-the-line costs. Now let's turn to our revised full year outlook. As I mentioned, we are raising guidance across all of our key consolidated financial metrics. Starting with property revenue outlook on Slide 7, we are raising our outlook by $40 million at the midpoint, which implies approximately 3% year-over-year growth or approximately 5% when excluding noncash straight-line revenue and FX impacts. We are reiterating organic growth assumptions across all regions and continue to expect organic tenant billings growth of approximately 5% and data center growth of approximately 13% year-over-year. The increase in outlook was driven by $50 million of FX tailwinds, a $5 million increase to pass-through revenue, and $5 million of incremental non-run rate revenue in the U.S. This was partially offset by $20 million of revenue reserves in Latin America, primarily related to our previously disclosed legal dispute with AT&T Mexico over the calculation of tower rent. As we disclosed in September, we reached a positive interim agreement with AT&T Mexico, whereby AT&T Mexico has paid American Tower the majority of withheld payments and will resume monthly payments of the majority of tower rents owed going forward. The remainder of the rents not paid to American Tower are to be deposited into an irrevocable escrow account administered by an independent trustee. The funds in escrow will be released in accordance with the final ruling of the arbitration or by mutual consent of the company and AT&T Mexico. We remain confident in the terms of our master lease agreement with AT&T Mexico and expect to prevail in the arbitration. Per our conservative reserve policies, our 2025 outlook assumes approximately $30 million of revenue reserves for the full year, of which $19 million are already reflected in our results through the third quarter. We expect future reserves of approximately $8 million to $10 million per quarter until the arbitration is settled. The arbitration is scheduled for a hearing in August of 2026, and the final ruling may come at a later date. Moving to adjusted EBITDA on Slide 8. We are raising our adjusted EBITDA outlook by $45 million at the midpoint, which implies approximately 4% growth year-over-year or approximately 7% growth year-over-year, excluding noncash net straight-line and FX impacts. The increase to outlook was driven by $30 million of FX tailwinds and $15 million of upside from consolidated operating profit, primarily driven by U.S. services outperformance. And finally, moving to our outlook for AFFO on Slide 9. We are raising our attributable AFFO outlook by $50 million, which now implies growth at the midpoint of approximately 7% year-over-year on an as-adjusted basis or approximately 9%, excluding financing costs and FX impacts. The increase to outlook was driven by $20 million of FX tailwinds, $15 million of cash-adjusted EBITDA, and $15 million of upside from other items, consisting of $15 million of upside from net interest expense and $5 million of upside from cash taxes and minority interest, partly offset by $5 million of higher capital improvement CapEx. Turning to Slide 10. Our 2025 capital plan remains consistent with our prior outlook. We continue to expect to distribute approximately $3.2 billion to our shareholders as a common dividend in 2025, subject to Board approval and expect $1.7 billion in capital expenditures. $1.5 billion of our capital expenditures are related to discretionary projects of building approximately 2,150 new towers at the midpoint and $600 million of data center spend. Importantly, we expect 80% of our discretionary projects this year to be in developed markets, consistent with our capital allocation philosophy that Steve reiterated earlier. Moving to the right side of the slide, our balance sheet remains strong. With our net leverage now at 4.9x, $10.7 billion in liquidity and low floating rate debt exposure, we have significant financial flexibility. We'll remain disciplined in how we utilize our balance sheet and allocate capital to optimize long-term shareholder value creation. Subsequent to quarter-end, we have executed $28 million of share repurchases, and we will continue to be opportunistic in utilizing the remaining $2 billion that the Board has authorized for share repurchases. Turning to Slide 11. In summary, we are pleased with our results year-to-date, which demonstrate the fundamental durability of our business model. Robust mobile data consumption growth and demand for our interconnection-rich data centers underpin a long runway of growth opportunities for American Tower. With our best-in-class portfolio of towers and data centers and strong balance sheet, we are well positioned to capture these growth opportunities and deliver on our goal of the industry-leading AFFO per share growth.

So Steve, a quick one for you. So services revenue continues to come in above expectations, ours and the Street. Typically, that was a leading indicator for domestic deployments. So I would love to hear your thoughts on how that potentially factors in deployments in 2026. And then maybe to feather in another one, any thoughts you can also offer on how the AT&T EchoStar spectrum acquisition might impact deployments from AT&T and your expectations with that company?

Sure. Thanks for the question. So I'll start with the services piece. We've had a healthy pipeline of activity this year in services, and it's a near record year. You have to go back to when we actually owned construction management firms back in the early 2000s to find a better service year for us. So we're very excited about the activity levels that we've seen. We also have a larger construction management component this year than we've had in prior years. So that's a little bit of what's kind of feathering into that. But that's indicative of the carrier activity that we're seeing. And as we said from the beginning of the year, we're seeing robust activity across the board. And that's continued build-out of the 5G mid-band spectrum throughout the networks and also some early phase densification that we're seeing as well. So we're excited about the activity levels that we're seeing there. We'll refrain from guiding to 2026 until February on that. But we do see a healthy pipeline building, and we do think that our services business will be a good robust contributor in 2026 as well. So we're feeling very good about what we're seeing and hearing in terms of how that pipeline is building next year. In terms of the spectrum sale, again, we'll learn more about that and share more about that in February in terms of 2026. What we've typically seen with the carriers is that when they buy spectrum, they want to deploy it. And there is certainly a lot of opportunity to continue to deploy mid-band 5G on our sites. And so we're looking forward to working with AT&T and helping them in what they decide to do next year. But until they've announced their build plans, it's probably not appropriate for me to comment in terms of what we think they're going to do on that.

First, on the spectrum front, the FCC now has marching orders to auction a lot of spectrum over the coming years. Some of it at potentially much higher frequencies than the mainstream spectrum that we've seen deployed to date, I think potentially as high up as 10 gigahertz. Obviously, it's going to depend on what bands are ultimately selected. But broadly speaking, how are you thinking about the relevance of your tower portfolio for potentially supporting some of these much higher frequency bands given their propagation attributes?

Yes. Thanks for the question. Look, I'm excited to hear that those bands are coming to market because towers are going to be the primary way those bands are deployed, even up into that 7, 8, 9, 10 gigahertz. And that really underpins the beauty of the tower model and the long-term growth that we're going to see on the portfolio. And so when I see what's kind of been identified by the government, some of that, there's a little bit more mid-band to support 5G. But a lot of those spectrum bands that you just referenced are the 6G bands that need to be freed up and allocated for the U.S. to be competitive in the 6G market. So we're excited to see that, that's been identified that they're working on making that available. And we're looking forward to seeing how that plays out. As we've seen in the past, the higher the frequency, the lower the wavelength, which means you will need some densification of sites. So as we look out across the landscape of the remaining tranche of 5G and also 6G, we think that bodes very well for long-term growth for us because carriers are going to densify their networks. It will give them more bandwidth. You'll see new use cases coming out. And there's some really exciting things coming out in kind of the early discussions about 6G and what it supports. So we're very supportive of those bands coming to market and being auctioned, and we're looking forward to working with our customers to get those deployed as soon as they can.

Okay. Great. Can I ask one on CoreSite as well? I saw your pre-lease share was down to 6% this quarter. I think historically, that's been driven by sort of larger customers taking big flows of space. I guess should we think about the 6% as, again, just the product of the ebb and flow of larger deals? Or are you kind of purposefully saving the space that you're developing for more of a retail SKU?

There's no slowdown in the deal flow. We are still seeing incredibly robust demand. What you're seeing in that dip on pre-leasing is us putting some stuff that was in construction to service. So you're really just seeing that move from pre-leasing to actual leasing. And that pre-leasing new projects to build new sites. So that's just a function of the flow of the construction, not a deal flow at all.

Okay. Okay. So no underlying changes there. Good to hear.

Yes, we're still seeing huge demand drivers in CoreSite.

I was wondering if you could provide more details about the cost optimization program when you report Q4 results. Can you give us an idea of the opportunity in terms of rough magnitude? How would that affect the model? Is it a one-time thing or something that would develop over several quarters? Additionally, what considerations are you thinking about for sizing that opportunity? Are you trying to gauge the churn activity among potential customers, or are there other factors that are particularly important as you assess this?

Jim, thanks for the question. So I'll start off by highlighting the fact that cost efficiencies is one of our strategic priorities. You've heard Steve and I talked about that over the quarters and the years as well. So it's something we've been focused on for a while here. I would point to a couple of things that have resulted from the work that we've done over the years. If you go back to 2020, since that time period, we've been able to expand our EBITDA margins by about 300 basis points. That comes from solid, steady organic growth. It includes absorbing the Sprint churn, but it's complemented in a material way by the cost efficiencies that we've driven into the business over that time period. You've seen a couple of years where SG&A actually stepped down multiple years in a row. This year, it's about flat. So we're holding things very steady after reducing SG&A quite a bit over time. So we've got a very efficient business globally as it stands today with strong margins, and as I pointed out, expanding margins. So we do see the future opportunities as incremental improvements to an already efficient business, not necessarily a step function change. With that said, Steve has talked about, and we did hire or create a new role of Chief Operating Officer. That is a global role, but no fills that role. And it's focused on simplifying our operations across all areas in areas like supply chain technology, service delivery, and network operations. The goal there really is to improve service quality across the board by making things simpler and bending the cost curve down over time, particularly in the direct cost area. That should help us continue to maintain strong margins out into the future in a way to complement steady organic tenant billings growth. With that said, we do look forward to our next earnings call when we finish up 2025, to talk about the fourth quarter results and get into the '26 outlook. At that point, we will have a little bit more detail around cost efficiencies and improvements that may come from the COO position.

That's helpful. And then maybe as a follow-up, your data center business, I think you're guiding effectively to the midpoint of your prior guidance. A lot of your peers have sort of taken up their guidance. And obviously, the data points, as you pointed out in terms of new business, are very, very positive across the whole ecosystem. So can you maybe give us a sense about whether there's anything happening under the hood that would sort of mute the upside you're seeing at least in the current business for the next couple of months into the end of the year?

Yes, I'll take that one. No, there's nothing that would mute our expectations for the business. We continue to believe that sustained double-digit growth is possible as long as we can keep building the capacity to absorb the demand that we're seeing out there. And we continue to see increased demand for the space in CoreSite from our core customer, which is the enterprises that need to be co-located in that facility for hybrid cloud deployments. And what's exciting about the way that customer is evolving is they're actually also expanding their installations to put inferencing there. So a lot of those key enterprise customers are expanding their installations to have their inference co-located with their hybrid cloud deployments. And so there's a very long tail of that activity. So I think all the trends that we're seeing in the space reinforce the fact that there's a huge growth path there for us. So there's nothing muting that. I think we were just pretty close on our expectations for the year. And we pride ourselves on being pretty accurate on that. So nothing to be concerned about there. And in fact, we're excited about the future of CoreSite.

Jim, I would like to add to Steve's comments with a few additional points. We are experiencing strong double-digit growth, which is reflected in our numbers. As Steve mentioned, this aligns well with our expectations. I want to emphasize that this performance exceeds the underwriting assumptions we had when we initially acquired CoreSite. The business is excelling, delivering high stabilized yields on assets. This is why we are increasing our capital expenditures, which have reached over $600 million. We have a solid pipeline and can be selective in who we bring into our facilities, along with a strong pricing capability that is leading to positive cash mark-to-market results at the upper end of our projected range. Additionally, the business is well positioned for the future, with approximately 296 megawatts of power available for future development, providing us with a significant opportunity to meet anticipated demand. We are currently constructing about 42 megawatts, the highest level we have seen at CoreSite in some time, to accommodate the strong demand we are experiencing. The record levels of sales and new business in recent years are now being delivered, which is another reason for a slight decrease in pre-leasing as we build to meet this demand. Our CoreSite assets are interconnection-rich and network dense, placing us in a strong position for the future in terms of both demand and pricing. We are well-prepared to address the anticipated demand moving forward.

Steve, I appreciate your comments in the beginning. Obviously, it's 25 years, you've seen a lot of spectrum deals and M&A. I wanted to just touch on one, UScellular T-Mobile deal is closed. Can you remind us again your exposure to UScellular? And then also, interestingly, T-Mobile on their earnings call talked about a charge where they were going to be reducing some cell sites that were not UScellular. That's one of the first times I've seen kind of carriers without a deal kind of saying they're reducing things. Do you have any extra color on what T-Mobile was talking about there?

On the second question, I don't have any color on that, Ric. In terms of the UScellular portfolio, it's pretty modest. They represent a little bit less than 1% of our U.S. revenue, a little bit less than 0.5% of our global revenue. And there is a chunk of that, that's up for renewal next year, which we've talked about previously. We haven't given a specific percentage, but there's a good chunk of that up for renewal next year. And so we'll give more guidance on what we expect on that in February in terms of churn coming from that. But just given the overall exposure, we'll still be in that 1% to 2% historical range for churn, we believe.

Okay. And then on the DISH EchoStar AT&T deal, are you guys open to like doing a negotiation with DISH to kind of get an NPV value because we're watching that just trying to see how long Charlie Ergen wants to keep making tower payments, but you have good contracts, it seems. So just trying to get a sense of openness to trying to say, can we resolve this sooner rather than over 11 years.

Yes. Well, Rick, we've got a long track record of maximizing the value to our shareholders through our contract structures and any negotiations that we do. And so you can assume that we're going to retain the discipline we've always had on that. I think it'd be premature to speculate on what something might look like on that. Now what you will see in our 10-Q when we file it is you'll see that we did receive a letter from DISH saying that they believe they're excused from making payments under the MLA based on the spectrum sale. We disagree with that, and in fact, we filed suit. We filed a declaratory judgment action to ask the court to confirm that we own the remainder of the rent under that agreement. And just to remind folks, that agreement goes through 2036. And this represents about 2% of our total property revenue, about 4% of our U.S. and Canada property revenue. And so we're focused on defending our contract and making sure that everyone acknowledges that it's a valid and enforceable contract through 2036. And then we will have whatever discussions make sense that are going to maximize long-term growth. But again, we feel good about our contract. We feel good about the collectibility on it, and we will continue to do the right thing for our shareholders for the long term on that.

Makes sense. One last one for me. Obviously, nice to see stock buybacks come in and kind of an endorsement of where you feel your stock price is at. Also, finally, your leverage is below 5.0000. How should we think about the M&A environment out there for external growth, stock buyback and where are we at as far as private versus public multiples, which is kind of the capital allocation question between stock buyback and M&A?

Thank you for the question, Ric. You've covered all the key areas. Let me begin by emphasizing our approach to capital allocation, which has been consistent and disciplined over the years. Our focus is on maximizing long-term shareholder value. The top priority in our capital allocation strategy is to distribute 100% of our REIT taxable income, which is projected to be about $3.2 billion this year, pending Board approval. After that, we allocate approximately $1.5 billion to $2 billion annually to internal capital programs, aiming for the highest risk-adjusted returns. Currently, we are prioritizing developed markets, especially the U.S. and Europe, in the tower sector and with CoreSite. We are also evaluating M&A opportunities alongside share buybacks and debt repayment. While we consider all of these options, we haven't identified any substantial M&A opportunities at this time. We've been slightly above our leverage target recently, as we have been focused on strengthening our balance sheet and enhancing our credit quality, which currently stands at BBB+. This quarter, our leverage is below 5x. Although we have experienced some pressure on our leverage due to a projected decrease in EBITDA for Q4, this is influenced by currency fluctuations affecting our European debt in U.S. dollars. We may reach 5x again later this year, but we believe we can maintain that level sustainably, which gives us more flexibility. Share buybacks remain an option, and we have repurchased about 28 million shares. When evaluating M&A opportunities globally, we notice that private multiples for towers remain high compared to public companies. However, our decision-making also takes various factors into account. We believe we have a strong portfolio and that buying back shares is a logical strategy given our confidence in achieving upper single-digit AFFO per share growth over time, excluding the impacts of foreign exchange and interest rates. We are enhancing the quality of our earnings, and as we continue to reduce leverage, we will have even more options for capital allocation, whether in M&A or share buybacks, with a current preference leaning towards share buybacks.

Just curious, there's been some chatter around some of the new spectrum sales and your ability to monetize them, for instance, the 3.45 that AT&T is getting, which they already have in the network just requires a software upgrade. Any just kind of high-level commentary on how you think some of this additional spectrum could impact future densification demand that you're starting to see in your footprint, as you mentioned?

Yes. Thanks for the question. So generally speaking, when carriers get more spectrum, that's good for us because they end up deploying that spectrum, and it typically requires them to do network augmentations that are monetizable events. Now on any given site, depending on the specifics of the site, there could be a software push that may not be an event at that moment. But over time, what we've seen is that more spectrum results in more leasing revenue for us. Even if they're able to do it with software pushes and kind of as an initial instance, that doesn't necessarily mean that they won't need to densify over time. If you think about the growth of mobile data in the U.S., the latest CTIA report had it at about 35% year-over-year. And all the experts we talk to believe that mobile data usage will continue to rise at a robust percentage, and the needs for the networks to augment themselves are going to basically need twice as much capacity in 5 years as you have today. And everyone that we talk to believes that this will come in part through spectrum, in part through efficiencies in the technology, but mostly through densification. So even the spectrum that's being considered by the FCC to be auctioned, plus the spectrum that's kind of out there in the market, we think that plus technology will solve about half of the issues that they need to solve in terms of quantity of data produced. The other half is going to have to come from densification. And so over time, we believe that, that densification is going to be right in line with what we originally thought. We always thought there'd be more spectrum that came to market. It could affect the timing a little bit in the near term, and we're kind of watching that to see how that plays out. But we don't think it changes the medium- to long-term outlook for growth in our business or the need to densify the networks over the medium to long term.

Eric, I would just add on the application volume that Steve mentioned, we see our overall applications up about 20% year-over-year. That's supporting the good news that we've had in services, but it also reflects kind of the activity level that we're seeing in the marketplace. We're seeing a higher growth rate in the applications for colos. That's up more like 40% or so. So we are seeing the beginning of this shift or an increase in colocations, which could be the beginning of densification. Now with that said, our colocation applications still represent a modest percentage of our overall applications, but we are experiencing an increase in a faster growth rate than the overall applications, which we think is good news.

Yes. I appreciate that. And I guess just to follow up on one more question. I know you had one customer that came off their MLA earlier this year, and they're on like an à la carte type of leasing arrangement. Any update on them? It sounds like things are progressing as planned. I think there was some revenue contribution that got shifted into 2026. And is there any kind of active discussions on maybe putting them back on a holistic MLA? Or are you kind of happy with the current arrangement you have with them?

We've always been agnostic as to whether we're under a comprehensive MLA or not because the underlying business that they need to do with us doesn't change, whether they're on a comprehensive agreement or not. And we've proven over a couple of decades now that we're successfully able to monetize those deployments, whether they're under a holistic structure or an à la carte structure. You can assume that we're always talking to every customer all the time. I mean the ink doesn't even dry on a contract before you're talking about the next iteration of it. So those are always ongoing discussions, but there's really nothing to report on that. We're there to support the rollout. And the only real difference for us is it makes a little bit of a timing difference sometimes under the comprehensive agreements. It's kind of more fixed and more predictable, and it's a little bit more variable on an à la carte basis. But if you're thinking about the medium to long term, we’re going to get that revenue either way because it may come in a little bit more fits and starts versus that kind of cadence that we can lay out in the contract.

It's great to be back. I have two questions. The first one for you, Rod, is to follow up on Ric's question about whether DISH is current and under what circumstances you would consider taking a reserve given the ongoing lawsuit between you. On a more positive note, I’m curious about the potential implications for a space-based player that now owns terrestrial spectrum and how that could lead to new deployments that weren't anticipated in our long-term model.

I'll address that since we're discussing DISH. Right now, DISH is current, so we won't set aside any reserves because they are up to date on payments, and we expect them to continue paying. The lawsuit we filed was a precautionary measure to prevent any payment disruption. Therefore, it's too early to consider reserves for this situation. Regarding the space-based player, if they merely act as an additional service for other carriers, they likely won't develop much ground infrastructure themselves. There may be certain ground facilities to support their networks, but these wouldn't significantly impact the opportunity. If they choose to provide direct services, they might enhance their satellite network with ground sites since satellites struggle with building penetration and urban density. This could introduce potential benefits that we haven't yet accounted for, but currently, we are not projecting any of this in our guidance. Our long-term projections do not include that additional carrier, which would mean any developments in that area would be extra benefits on top of what we've already presented.

David, I'll just welcome you back. It's great to have you back on the call.

Thanks, Rod. And I'll use that as an opening to ask one follow-up. I appreciate it, guys. So just as we think about SpaceX deployments, the growth of fixed wireless access with growing spectrum availability, the BEAD funding kind of pushing fiber out, the WISP Marketplace is under threat. I know that they can, in rural markets, be a customer. Is there any reason to believe that kind of the threat to the WISP market is a threat to churn as we look forward in the business model?

Look, we have a lot of great customers that are WISPs, and that's been a component of our vertical market segment for a long time. So they do comprise a very small percentage of our overall revenues. Some of those WISPs have struggled for a long time. So we do see churn every year in that, and that's kind of taken care of in our normal churn, that 1% to 2% that we see as normal churn. So it wouldn't surprise me for some of those guys to have some trouble, again, consistent with what we've seen in the past. But I don't see anything in there that would make me think we're going to fall outside that normal range of churn, 1% to 2%.

Just given the comments on EchoStar, I just had a couple of other follow-ups. The first one is you mentioned it's about 4% of domestic revenue currently. How much is EchoStar anticipated to contribute to growth over the next couple of years based on the contractual minimums that you've established? And then secondly, you referenced, I think, the long-term guidance just a few moments ago. Do you still believe American Tower is on track for its long-term domestic leasing growth guidance? And if you pull out EchoStar from that, can you share what the organic growth looks like ex EchoStar?

We haven't provided specific details about contributions for the upcoming years, and I prefer not to delve into that right now. We will release guidance for next year in February. Regarding our long-term U.S. organic growth guidance from 2021, we're experiencing a strong pipeline of activity from the three major carriers, and we feel positive about the current activity levels. This guidance was shared over five years ago, and we've been quite accurate with our predictions for the initial years. Looking ahead to the last couple of years, there were unforeseen events when we established that guidance in 2021, such as T-Mobile's acquisition of UScellular and DISH's decision to sell its spectrum and exit the network market. We'll incorporate these factors into our guidance for next year. However, I won't specify how this will impact 2026 and 2027 until we issue guidance in February. Nevertheless, our long-term growth outlook remains unchanged, and we expect our U.S. business to continue contributing mid-single digits, irrespective of changes with DISH. More details about those final two years of the multi-year guidance will be available in February.

Can I just follow up to that with one other? So when I think about when you gave that multiyear guide several years ago, there was significant change going on in the industry. And so you kind of gave us this north star, if you would, of where you think growth is going over an extended period of time. Do you think that conditions have changed enough and the timing is there where maybe not just giving a view for the next couple of years, but maybe giving new multiyear guidance when you come out with the fourth quarter results? So kind of giving us a more extended view, an updated view of where that's going.

Look, we'll figure out what we're going to say in February on that. What I would say is we've given you guys a long-term growth algorithm that we think is kind of directionally what you should be thinking about for the longer term with our business. And nothing in the recent events really changes that long-term growth algorithm. What drives growth of the tower rents and the equipment on the towers is the growth in mobile data consumption. So as long as we continue to see mobile data growth in the U.S. and abroad at the types of clips that we're seeing, then we believe that the need to augment networks is going to continue to roll out just the way we've foreseen it that supports that algorithm. Now it's possible that you're going to see even more data growth than that because all the assumptions that are out there and the historical growth we've seen doesn't include much AI. So as AI becomes a larger component of our daily lives and that makes its way onto the mobile devices, it's possible that growth is going to be even higher. But in terms of our kind of long-term growth algorithm, we believe that somewhere in the mid-single digits is where you should see the organic growth in the developed markets and a little bit higher in the emerging markets. And that's probably as specific as we're going to get from a long-term guide on that. And again, we'll give you guys more color on the next year in February.

I just wanted to follow up on the U.S. business quickly. What is driving the $5 million in incremental non-rate revenue there? And then a second question on the U.S. data center business, I guess, the quarter-to-quarter growth was kind of a little bit lower than what it's done recently. Was there some churn there that was a little bit higher than normal?

Richard, thanks for the question. Regarding the $5 million, that's just small non-run rate type activity. So nothing really to worry about and nothing specific that I would point to as well. And that really is the same issue with the differences in the data center business, really just one-time items here and there. There's always fluctuations quarter-over-quarter, but nothing material.

Got it. And then on a bigger picture one with the cost efficiency review that you're going to talk more about next quarter, could that also kind of lead to some strategic changes and also kind of, call it, CapEx changes and priorities?

I'll take that one. Right now, we're really looking at how we can get the efficiencies in the business through things like supply chain, kind of getting a little bit of the best practices across borders, automation, there's some AI opportunities in there. There's nothing specific in terms of the capital. Now we do spend capital in the U.S. in particular, to buy our land. And that does help manage the land cost on it, and we also get very good returns on the capital. It's possible that we could find some opportunities to do that more aggressively in other geographies, but that's something that would come later down the line. That's not one of the near-term things that we're focused on. But that's the only thing I can think of that would be any kind of a shift in capital. And that really wouldn't be a shift; that might just be flexing up a little bit more on that opportunity if we found the right chance to do that.

Maybe just one more on EchoStar. I know that maybe there will be more info in the queue, Steve. But are there anything we should be thinking about in terms of what's next? It sounds like you expect them to continue to pay you. But is there any, I don't know, court date or any other process info you want to share with us at this point as we think about the situation moving forward?

No, we just filed it. So there's nothing on the docket yet to point to on that. And again, we think this is very straightforward. We think that we have a valid enforceable contract. We don't think that anything has changed in the marketplace that would hamper the enforceability of that through the remainder of the term. And like I said, we just preemptively filed that because we think it's the right thing to do to protect our shareholders' interest on that.

Okay. And then just one more. You all have clearly bought back some stock, and the stock has faced pressure. The multiple we are seeing for towers, including AMT, is at the lower end of where it has been for quite some time. Additionally, the spread between data center stocks and towers has significantly widened. I am curious about your perspective on CoreSite's asset value. Do you evaluate the worth of data center assets in both public and private markets in relation to what is reflected in your stock? It appears that you are not receiving credit for it at the moment. Is that an important consideration as you contemplate the ideal ownership structure for this business? Are you observing more synergies between the two businesses? You have discussed this over the years, and I wonder if that is beginning to align more clearly in your view.

Yes, I'll take that one. We believe that CoreSite aligns well with American Tower, and we anticipate that the long-term benefits of integrating towers with a highly interconnected ecosystem will present us with edge opportunities. We are confident in this future. In the meantime, we have a highly successful asset. Regarding the stock price and similar factors, we are focused on long-term value creation for our shareholders rather than short-term valuation snapshots. Our priority is to maximize the asset's value and collaborate with industry partners to develop edge solutions. When considering a stock buyback, we are simply being opportunistic, evaluating the stock's value alongside other capital uses, which we believe justifies the buyback. Our decision to buy shares isn't influenced by CoreSite or that specific business; it's based on our overall enterprise value perspective. With CoreSite, we are dedicated to accelerating growth while adhering to our business model and return expectations. We look forward to demonstrating our edge capabilities over time.

Benjamin, I don't think I mentioned this earlier, but I would just highlight that we do have a Board authorization for a buyback program up to $2 billion. So we're just beginning to tap into that. So we do have capacity there already approved by the Board in terms of buybacks.