SBA Communications Corp (SBAC) — Q2 2020 Earnings Call Transcript

Thanks, Nick. Good evening and thank you for joining us for SBA's second quarter 2020 earnings conference call. Here with me today are Jeff Stoops, our President and Chief Executive Officer; and Brendan Cavanagh, our Chief Financial Officer. Some of the information we'll discuss on this call is forward-looking, including, but not limited to, any guidance for 2020 and beyond. In today's press release and in our SEC filings, we detail material risks that may cause our future results to differ from our expectations. Our statements are as of today, August 3rd, and we have no obligation to update any forward-looking statement we may make. In addition, our comments will include non-GAAP financial measures and other key operating metrics. The reconciliation of and other information regarding these items can be found in our supplemental financial data package, which is located on the landing page of our Investor Relations website. And with that, I'll now turn the call over to Brendan.

Thanks, Mark. Good evening. SBA produced another solid performance during the second quarter notwithstanding continued hardship and uncertainty for many across all of our markets due to COVID-19. Total GAAP site leasing revenues for the second quarter were $482.4 million and cash site leasing revenues were $482.1 million. Foreign exchange rates were a $1.3 million tailwind to revenues when compared with our internal estimates for the second quarter. They were, however, a significant headwind on comparisons to the second quarter of 2019, negatively impacting revenues by $21.4 million on a year-over-year basis. Same-tower recurring cash leasing revenue growth for the second quarter, which is calculated on a constant currency basis, was 5% over the second quarter of 2019, including the impact of 1.9% of churn. On a gross basis, same-tower growth was 6.9%. Domestic same-tower recurring cash leasing revenue growth over the second quarter of last year was 6.7% on a gross basis and 4.5% on a net basis, including 2.2% of churn, of which 0.5% was related to Metro/Leap and Clearwire terminations. Domestic operational leasing activity, representing new revenue placed under contract during the second quarter, was again slower than in the year-ago period and remained similar to the first quarter and the fourth quarter of 2019. The measured pace of new bookings in the quarter was primarily due to a slower restart than we anticipated by T-Mobile following the closing of their merger with Sprint, while our other domestic customers were steady. However, as we have begun the third quarter, we have seen a meaningful increase in application activity from T-Mobile that we expect to drive increased domestic organic bookings in the second half of 2020 and into 2021. During the second quarter, amendment activity was again the large majority of our domestic bookings with newly signed domestic leasing revenue coming 69% from amendments and 31% from new leases. The big three carriers represented 70% of total incremental provisional domestic leasing revenue signed up during the quarter. We again have a nice contribution to domestic leasing activity from some cap-to-funded rural broadband providers. As I mentioned a moment ago, our domestic application backlog has started to grow nicely, which portends well for a steadily increasing pace of new bookings during the second half of the year. Internationally, on a constant currency basis, same-tower cash leasing revenue growth was 7.8%, including 0.5% of churn or 8.3% on a gross basis. We continue to see leasing activity internationally, but it was a little slower overall in prior periods due to COVID-related spending reductions by customers in a number of our markets. This quarter, Brazil was again the largest contributor to international lease-up. Gross same-tower organic growth in Brazil was 10.4% on a constant currency basis. During the second quarter, 86.1% of consolidated cash site leasing revenue was denominated in U.S. dollars. The majority of non-U.S. dollar denominated revenue was from Brazil, with Brazil representing 10.9% of all cash site leasing revenues during the quarter and 8% of cash site leasing revenue, excluding revenues from pass-through expenses. Tower cash flow for the second quarter was $394.1 million. Our industry-leading domestic tower cash flow margin was 84.3% in the quarter. International tower cash flow margin was 71.5%, also industry-leading, and was 91.1% excluding the impact of pass-through reimbursable expenses. Adjusted EBITDA in the second quarter was $368.8 million. Our industry-leading adjusted EBITDA margin was 72.8% in the quarter, up 300 basis points from the prior year period. Excluding the impact of revenues from pass-through expenses, adjusted EBITDA margin was 77.1%. Approximately 99% of our total adjusted EBITDA was attributable to our tower leasing business in the second quarter. Our second-quarter tower cash flow margin and adjusted EBITDA margin were again both record highs for SBA. AFFO in the second quarter was $259.9 million. AFFO per share was $2.29, an increase of 9.6% over the second quarter of 2019 and a 14.8% increase on a constant currency basis. During the second quarter, we continued to expand our portfolio, acquiring 16 communication sites for $13.4 million and building a total of 79 sites in the quarter. Subsequent to quarter-end, we have purchased 25 communication sites and one data center for an aggregate price of $61.6 million and we have agreed to purchase 100 additional sites for an aggregate price of $42 million. We anticipate closing on a majority of these sites by the end of the year. The data center is located in Jacksonville, Florida and will allow us to continue to expand our knowledge of the data center business, which we believe will be ultimately critical to maximizing our edge data center offerings as we continue to develop our strategy and invest in the provision of edge data centers located at our existing communication sites. Jeff will discuss further in a moment. We also continue to invest in the lands under our sites, which provides both strategic and financial benefits. During the quarter, we spent an aggregate of $12.9 million to buy land and easements, as well as to extend ground lease terms. At the end of the quarter, we owned or controlled for more than 20 years the land underneath approximately 71% of our towers. The average remaining life under our ground leases, including renewal options under our control, is approximately 35 years. In our earnings press release this afternoon, we included an update to our outlook for the full year 2020 providing increases in all key metrics. Outperformance against our second-quarter foreign currency exchange assumptions and slight improvements in forecasted FX rates for the balance of the year have partially contributed to our increased outlook. Increases due to acquisitions and better-than-anticipated cash basis revenue collections offset by modestly lower expected contributions from new leasing activity represented the rest of the increase in our full-year outlook. As mentioned earlier, we experienced a slower start to new revenue bookings this year than we previously expected, which ultimately slightly delayed the timing of new revenue growth from organic lease-up by 90 to 120 days. However, given our increasing application backlog, our recent customer conversations, and the significant network deployment obligations of some of our customers, we expect this timing delay to be just that, a timing delay. We anticipate growth in domestic bookings in each of the next two quarters and into 2021.

Thanks, Brendan. We ended the second quarter with $10.7 billion of total debt and $10.2 billion of net debt. Our net debt to annualized adjusted EBITDA leverage ratio was 6.9 times, which is down one-tenth of a turn since last quarter. Our second quarter net cash interest coverage ratio of adjusted EBITDA to net cash interest expense was 3.9 times. On May 26th, we issued an additional $500 million of senior unsecured notes as an add-on to our $1 billion issuance completed in February of this year. These new notes were issued at 99.5% of par value and similar to their original issue, they have a fixed interest rate coupon of 3.875% and a maturity date of February 14th, 2027. The net proceeds of this issuance were used to repay the entire balance outstanding under our revolving credit facility and for general corporate purposes. As of today, we have no outstanding balance under our revolver. Subsequent to quarter-end, on July 14th, through a trust, we issued $750 million of 1.884% senior secured tower revenue securities, which have an anticipated repayment date of January 9th, 2026 and $600 million of 2.328% senior secured tower revenue securities, which have an anticipated repayment date of January 11th, 2028. The aggregate $1.35 billion of tower securities have a blended interest rate of 2.081% and a weighted average life through the anticipated repayment date of 6.4 years. Net proceeds from this offering were used to repay the entire $1.2 billion aggregate principal amount of the 2015-1C and the 2016-1C Tower Securities, with the remaining net proceeds being used for general corporate purposes. The pro forma weighted average interest rate of our outstanding debt is 3.5%, and our weighted average maturity is approximately four and a half years. During the second quarter, we did not repurchase any shares of our common stock and as of today, we have $424.3 million of repurchase authorization remaining under our $1 billion stock repurchase plan. The company's shares outstanding at June 30th, 2020 are 111.9 million compared to 113.1 million at June 30th, 2019, a reduction of 1.1%. In addition, during the second quarter, we declared and paid a cash dividend of $52 million or $0.465 per share. And today, we announce that our Board of Directors declared an equivalent third quarter dividend of $0.465 per share payable on September 22nd, 2020 to shareholders of record as of the close of business on August 25th, 2020. With that, I'll now turn the call over to Jeff.

Thanks, Mark and good evening, everyone. The second quarter was another solid one for SBA, both financially and operationally. We again produced leasing revenue, tower cash flow, adjusted EBITDA, and AFFO that were well ahead of our expectations. Our tower cash flow and adjusted EBITDA margins were once again the highest in our company's history and our AFFO per share grew 14.8% on a constant currency basis over the second quarter of last year. Our business remains healthy and strong. While we greatly appreciate our position in an essential mission-critical business, we recognize that many people are suffering from the continuing impacts of the global COVID-19 pandemic. When we first reported our first quarter results three months ago, we did not expect so many of the markets in which we operate to still be deep in the fight against the virus at this time. While I'm happy with our performance, our top priority continues to be the health and safety of our team members, customers, suppliers, and other members of the SBA family. At SBA, most of our offices have only been open to essential team members for the last four and a half months and we have figured out how to adjust to being a largely remote workforce. We've had a relatively small percentage of our global team members test positive for the virus and we are thankful that they're all doing okay. I'm extremely proud of the dedication and level of performance by our team members during these very challenging times, serving our customers and our communities. We have learned how to operate safely in this environment and we will continue to do so. In the U.S., the virus has had very little impact on our operational results. Things continue to be good, but as you heard from Brendan earlier, the level of domestic operational activity or new bookings during the quarter was at a similar level to the first quarter, and this is definitely lower than we expected a few months ago, primarily due to a slower start than we had anticipated from T-Mobile after the closing of their merger with Sprint. And we don't really see this as COVID-related, but T-Mobile choosing to initially focus on closing the Boost deal with Dish, integrating workforces, and delivering on synergies. In typical T-Mobile fashion, they seemed to have acted quickly, decisively, and thoughtfully and now have the organization they want in place to turn full attention to their network development needs and obligations. Although our timing was off by a quarter or so on when we initially thought we would see a material increase to domestic leasing activity, the anticipated increases in our application backlogs have now started, providing us confidence in steadily increasing bookings during the second half of 2020. Increased bookings will, of course, drive increased organic revenue growth in the periods following these bookings. We are excited about our prospects because we believe that we have now just begun the necessary phase of increased capital investment in macro networks in order to offer true 5G service. T-Mobile has a lot to do to meet their required 5G coverage goals, including upgrading the majority of their sites with either 2.5 gigahertz or 600 megahertz spectrum and we expect to be a valued partner to them in meeting their build-out objectives. In addition to T-Mobile, our other major domestic customers all have significant projects in process or ahead of them. AT&T recently launched true 5G service on low-band spectrum in a number of markets and we expect both AT&T and Verizon, along with many others, to be active in the current CBRS auction and particularly, AT&T and Verizon to be active in the C-band auction scheduled for later this year, which we believe will be a key component of future 5G networks and will require new equipment at many of their existing macro sites. In addition, our discussions with Dish have been very constructive and we anticipate that they will be actively engaged in building out a nationwide 5G network over a multi-year period. The fact patterns are setting up very well for a busy domestic leasing and services environment for the next several years. Internationally, we saw solid demand in most of our markets. However, we do believe there will be greater impact in our Latin American and South African markets than in the U.S. from the COVID-19 crisis. Some of our larger international customers have faced challenging economies and even government-required payment deferrals from their customers. As a result, some of our international customers have reduced anticipated capital expenditures and network expansion investment while they assess the length and severity of the pandemic in each of their markets. We view these current reductions as temporary. Wireless is almost always the primary source of broadband services in these markets. And we believe that as economic conditions improve, wireless capital spending will increase considerably. In our largest international market, Brazil, we're watching closely the recent announcements from our wireless carrier customer, Oi, regarding their plans to divest their mobile wireless assets. A consortium of the other three largest carriers in the market have expressed interest and submitted the most recent bid on these assets, although much needs to occur before any transaction can be consummated. Oi mobile represents 37.6% of our total Brazil cash leasing revenue and 3% of our total overall cash leasing revenue. Oi mobile's largest portfolio-wide carrier overlap is with Telefonica in Brazil, with Oi's revenue on those overlap sites representing less than 1% of our total overall cash leasing revenue, although any transaction would likely present much less overlap exposure as the three acquiring carriers would be expected for regulatory reasons to split up Oi's assets based on each carrier's geographic area of greatest need. Our Oi mobile leases also have an average remaining non-cancellable term of eight years. We continue to believe our long-term prospects in Brazil will be bolstered by a shift from four major carriers to just three stronger carriers competing on the basis of network quality. We expect the resolution of Oi's future will be a positive step toward an increased growth cycle in Brazil and improved wireless carrier health. We continue to favor investing in macro towers, including internationally, over other types of investments. Over the years, we feel we have proven very adept at managing the risk of international investments versus the benefits of faster growth, higher targeted returns, and more opportunities for investment. At the end of the second quarter, we enjoyed industry-leading international tower cash flow margins and our most mature international investments are generating attractive returns well above our cost of capital with much growth still ahead. We are very pleased. In addition to macro towers, we have continued to pursue other opportunities to create value around our sites while focusing on leveraging those assets, strengthening core revenue streams, accessing large new customers, and investing in strategic technology. One of the areas of growth we are pursuing is SBA Edge, where we are focused on using our existing tower assets to offer highly distributed local sites for edge data centers with the potential to provide low latency connectivity to wireless networks. We currently have over 8,000 pre-qualified tower sites in the U.S. as locations where we can situate an edge data center with access to secure space, power, and fiber. These tower edge data centers will provide co-location options for customers’ computing infrastructure with connectivity to a larger metro data center for internet or private network connectivity. In order to support this business, we have deployed an edge data center at our tower site in Foxborough, Massachusetts and we have also made investments in larger, more centralized data centers that we believe will act as edge hubs or intermediate aggregation points for compute and storage. Last year, we added a data center, our first in West Chicago, and just recently we acquired our second data center called Jacksonville's Network Access Point, or JaxNAP for short, located in Jacksonville, Florida. JaxNAP is a 280,000-square foot, 14 megawatt facility providing regional co-location and interconnection services to a variety of customers, including sub-sea cable telecommunications companies and approximately 20 fiber providers, all accessing and sharing the property. JaxNAP will allow us to develop deeper data center capabilities and further enhance our tower edge data center value proposition through increased interconnection and operational knowledge. We're excited about the potential of this value-added business line and are in discussions with a number of interested parties about a range of our expanding capabilities in this area. As we've said many times, however, for this new product offering to ever become material for SBA, a real 5G ecosystem needs to develop. Based on the increasing number of conversations we're having, we are optimistic that this will happen in the years to come. Moving now to our balance sheet, we were able to seize on favorable capital market conditions over the last couple of months to reduce our weighted average cost of debt and extend our maturities. We currently have no debt maturities until 2022 and we have higher liquidity than at any time in our history, including our fully available undrawn $1.25 billion revolver. In July, we issued $1.35 billion of securities in the securitization market, including $750 million of 5.5-year paper at a fixed rate of 1.88%, the lowest fixed price debt in our history. Our June 30th leverage was 6.9 times, a level I'm very comfortable with and the strength of our balance sheet provides us with flexibility to continue to be opportunistic around investment opportunities and share repurchases, while still being able to comfortably support our dividend. We did not repurchase any shares of stock in the second quarter; because we were targeting some of the volatility we took advantage of in the first quarter. We didn't get it, but stock repurchases remain a critical part of our value creation strategy. We announced today our dividend for the third quarter at a level of 26% above our third quarter dividend last year. Our dividend, however, remains at a relatively low percentage of AFFO, providing us the opportunity to continue investing in exclusive multi-tenant assets producing returns well above our cost of capital. SBA's adept use of leverage throughout our history has truly differentiated us from our peers to the clear benefit of you, our equity holders. It was another solid quarter in a very challenging time. I want to again thank our team members and our customers for their contributions to our success. We expect to stay very busy, serving our customers and our communities and we look forward to a solid and even better second half of the year. And with that, Nick, we are ready for questions.

Hi. Hey, guys. Glad to hear you and your employees and families are making it through these difficult times okay. A couple of questions, first, on the updated guidance. Brendan, I think you mentioned some of the increase was in the other category from the waterfall chart. Was that revenue collections or what was that, I think in the U.S. $5 million of the guidance increase was 'from other'?

Yes, Rick. That's a variety of miscellaneous things. It includes things like some higher cash basis holdover fees that we received, some a little bit higher on the structural augmentation, amortization and even some back-filling or out-of-period stuff. So, a lot of that was outperformance in the second quarter and a little bit of that is expected outperformance for the balance of the year. Rick?

Hey, can you hear me okay?

Yes.

Yes, now we can.

Sorry about that. Do you still expect to give guidance for 2021 on your fourth-quarter call? I know some companies giving on third-quarter calls. I was wondering what your thought is on 2021.

We will continue the same schedule.

Okay. And when we think of the new T-Mobile, glad to hear activity is picking up. As we think about the potential for the Sprint decommissioning concept, do you have a preference as far as getting paid up front, being paid over time, being paid on the current schedule? And how do you think T-Mobile thinks about what their preference would be on how to resolve the Sprint decommissioning into their integration?

It's interesting. There are two schools of thought among our shareholders. One is to spread it out evenly, while the other is to maximize the net present value or to focus on maximizing returns over time. I don't want to dig too deeply into predictions. It could lean towards one side, the other, or something in between. Regarding T-Mobile, they are smart and are focused on achieving the best results, which will require a mix of financial certainty, solid results, speed, and all the necessary elements to succeed in the broader goal of becoming a leader in 5G.

Okay. And on the Dish side, you mentioned you guys are having talks obviously looking forward to them getting actively engaged. Any gating factors from your side as far as when to ramp up the efforts with Dish? Do they need the funding in place or just as you think about Dish becoming a more meaningful 5G lease or what are you looking for to occur?

We are here and ready to go for Dish. We've worked with them for years now. They're a very good customer and when they say they're ready to go, we are ready to meet their needs.

Okay, very good. Well, again, I hope you guys stay well in these difficult times. Thanks.

Thanks, Rick.

Thank you. I have a question regarding international activity. You mentioned a slight decrease in guidance, and noted a slowdown as we approach the end of the year, particularly in Latin America. Do you believe this current slowdown will affect next year's growth? Additionally, how do you view international growth prospects for next year? I also have a follow-up about T-Mobile. How do we explain the slower start you observed at T-Mobile in light of their comments about accelerating the construction of 2,500 towers? Do you think this is due to activity on rooftops or the replacement of existing 2.5 equipment? When this is happening, is there potential benefit for you? Thank you.

Well, I don't think that commentary is inconsistent at all with what we're seeing now in terms of increasing applications and backlogs. So I would say that that's consistent. In terms of international, I think given the types of populations that are being served in South America and South Africa, it's going to depend largely on where the virus is and what stages of lockdown and economic activity you're going to see in those markets.

Okay. Okay. Thank you.

Great. Thank you very much. Good evening. You talked about some good activity from some of the CAF II builds. Maybe you could just talk a little bit about what opportunity you see from the RF process. It seems like there are plenty of people looking at fixed wireless solutions there? What do you see in that opportunity there? And then any color you could give us on the T-Mobile applications. What sort of opportunities on amendments putting 2.5 on T-Mo towers or putting the lower-band spectrum on the Sprint towers, if you got a sense of what sort of dollars that's coming out at? Thanks.

Yes. We do, but we're not going to get into that specifically, Simon. That's not something we share. What people should take from our commentary is everything is pretty much exactly like we thought. It's just 90 to 120 days behind where we thought it would be. And then in terms of your first question, yes, we do expect opportunities to come out of that. I mean, fixed wireless is going to be better for macro sites in certain areas than others. Some of the applications are more existing poles and not necessarily towers as much as some of the cash flow stuff was. But we do see opportunities there and think that there is going to be some added benefit from that. All of these programs highlight the need for increased spending and broadband rural connectivity. We will see some incremental benefits from that in the years to come.

Great. Thank you.

Hi, good afternoon. I was wondering if you could focus a little bit on the edge projects that you were mentioning in the initiatives and a couple of questions there. First, if you could talk about the types of learnings that you're looking to extract from the data centers that you've acquired and how that's helping you frame the edge opportunity? And then, the second thing is with the trial that you have in Massachusetts, as well as some of the sites that you've been prepping for the opportunity. How are you thinking about what you can monetize the land for the opportunity for relative to what you get in terms of revenue per tower today? Thanks.

Well, that's the business model choice that needs to be made. There are basically three options for us, which are to be just the basic landlord and run out the pad and the improvements and the connections. The second will be to take the middle ground and own the shell and the infrastructure but let somebody else own the active electronics and operate them; and then the third is to run the whole thing. And that's really what the data center ownership and operation is designed to allow us to do when it really comes time to make that decision to be in a position to do. The other thing that we have learned is that for the folks who will be customers at the edge or at the cell site, they all need and will be coming from some other larger data center repository. So, it's really quite interesting how the connectivity needs to work where large storage goes to moderate size and then ultimately out to the edge, the ultimate edge. So, the data center connections to the ultimate edge are going to be very important, and that's part of what we're working on here. We want to make sure we understand and have that capability operationally down. And whether in 10 years we own these data centers, I can't tell you, but we will understand what the relationships are between the absolute edge, which ultimately will be our forte, and the data center aggregation points along the way that will be necessary to make it all work.

Great. Thank you. Looking at your investments, a combination of M&A and buybacks year-to-date, I guess relative to what you typically spend in the year, it seems like you're pretty far off the typical pace. I guess, how do you envision the back half of the year playing out? Do you see enough potential M&A to get you where you want to be? Would you anticipate stepping on the buybacks if that doesn't present itself or are you comfortable letting the leverage continue to come down a bit? And then secondly, as it relates to Oi, and maybe just international more broadly, just curious if you had to take any notable bad debt reserves in the quarter that may have impacted EBITDA? And then secondly, I guess as part of that, are you still getting payments from them right now? Thank you.

Colby, we would rather not let leverage continue to come down, especially given the cost at which we're accessing debt and the growth that we have. We'd rather be out investing in new assets first and portfolio growth second. But we're not going to do stupid expenditures. I mean, that's always been the motto and the course of action here. There are a lot of things out there that we continue to look at and will be looking at, certainly enough to meet our minimum 5% portfolio growth. We certainly have the liquidity more than plenty to accomplish that. And it is our goal and belief that we will get there, but it's got to be the right stuff.

Yes. And Colby, on your question with regard to Oi, first of all, in terms of bad debt reserves, we didn't book any material bad debt reserves in the second quarter. And then from a getting paid standpoint, they continue to pay us the full amount that they owe us. So, no issues there.

Great. Thank you.

Hi. Thanks for taking my questions. Hey, your peers have spent a lot of time talking about returns by segment this quarter. And Jeff, you briefly alluded to international return in your prepared remarks. I thought I'd ask you the same. You disclose an ROIC calculation in your supplemental package. What would the domestic versus international split look like? And maybe more importantly, what do you think those numbers would look like when comparing assets that have comparable levels of maturity?

Hey, Nick. It's Brendan. So, from a ROIC standpoint, we're not breaking out that information specifically, given the different maturity levels of those portfolios. But I can tell you some general directional information about it, which is that the domestic ROIC is obviously higher than the consolidated 10.2% number that we put out, while the international was lower. But some of our more mature international markets like in Central America have current ROICs that are in the high-single digits. And in the case of certain countries like Panama actually exceed the U.S. So, the more mature markets that we've been in have performed very, very well. The less mature South American markets typically have ROICs that are in the mid-single digits. We've had obviously some FX headwinds that have weighed on the Brazil numbers a little bit. But on a constant currency basis, that's up north of 9%. So, we expect, as we kind of get into a little bit more normalized time period in terms of currency, that that number will actually show very well. So it's all gone pretty well in our markets that we've been in for a while.

Okay. Okay, that's great. Now, turning to Oi, I think you noted that you have an 8-year average contract term with them.

Yes.

If I'm not mistaken, that's a blend of some with very long terms and maybe some with more typical terms. Is that correct that it's kind of a barbell distribution? And if so, can you describe kind of what each end looks like?

Yes. Most of the Oi leases we acquired through leaseback scenarios have varying terms, but all are quite long. On average, the remaining term for Oi mobile leases is just over eight years, while some Oi fixed wireline leases extend beyond 25 years. Overall, there is a considerable amount of time left on these leases.

Okay. Got it. Got it. And if I could sort of one last quick one to you, Brendan.

Yes, let me just be clear.

Sure.

That eight years was specifically for mobile. We didn't even take wireline into account for that calculation.

Okay. Okay, got it. Got it. That makes sense. And then lastly, margins were very strong this quarter. Anything we should be aware of that's kind of one-time or one-time-ish in nature, like that were travel expenses or anything like that?

Yes, I mean, we were slightly better. I mean, you're looking at $1 million or so in the quarter of probably reduced SG&A due to things like that, but it's not overly material.

Okay. Okay, perfect. Thank you, guys.

Thank you. Yes. Just a little bit of color, it sounded like there has been a fair amount of purchase activity in the quarter and subsequent to the quarter. Maybe just kind of a little color on where those tower assets were focused and what was compelling about the purchase. And then just a follow-up, you haven't really mentioned indoor DAS. So just curious of any changes in direction or momentum there. Thank you.

The towers, well, I mean, I'd like to say that was a lot but it really wasn't. Most of that was in the US and they were healthy multiples, because they were very high-quality assets. There continues to be a strong bid, which goes back to the exchange I had with Colby about where we want to be. But you have to be very careful because prices continue to be challenging and not every tower is created equal. Your second question, Tim?

Just on indoor DAS.

Yes, we continue to move along in that area and add a couple properties every quarter, which doesn't sound like a lot, but it's a steady growing business. And it's a much more difficult business in many respects, because it is absolutely a custom one asset at a time business. But we are very encouraged by what's going on in the CBRS auction; I think it topped $1 billion today and that means there is, from what I understand, wide interest. I think that's going to be very good for that business.

Okay. Thank you.

Hey, guys. Thanks for taking the questions. First, just maybe Brendan, I think I heard you say that there is a 2.2% domestic churn rate, and 50 basis points of that was Leap/Metro stuff. Could you kind of elaborate on what the other churn is being driven by? Is it government or municipalities or M&A? And kind of historically it's been closer to 1%, 1.5% as kind of the core churn rate. If you could kind of elaborate on where you see that going. And then the second piece is on Dish, just as you kind of look out, it sounded optimistic on Dish. The last time, I think third quarter last year; we talked about Dish at some length, it was a lot on the services side. Is that kind of how you see the relationship beginning and then it kind of rolls into the macro side, maybe down the road? Some help there would be helpful too. Thanks.

David, on the churn, just as a point of clarification, obviously those percentages are same-tower percentages, so they're representative of a trailing 12-month period. I think you saw a little bit of a step-up in that a couple of quarters ago. And it's really the same thing that's kind of in there that's affecting. We are slightly above our historical 1.5%, 1.7%, and it's due to a variety of miscellaneous things. It includes a number of smaller customers that are modifying or shutting down kind of older technologies. We have a number of sites that were never on air. So, in some cases, they're not being renewed, plus there is actually still some legacy consolidation churn as well related to old vestiges of old mergers, including Verizon-Alltel, AT&T-Centennial, and all kinds of things that you've probably long forgotten about. So, it's a mishmash of different things.

Yes. And on Dish, Dave, I mean our comments haven't changed. Dish has publicly said that they're doing a lot of planning and prep work this year and very little capex and spending. And we've said the same thing, and there is no Dish in our guidance. But we have a great relationship with them, we talk to them all the time. We do a lot of planning and we think we're going to be a big help to them and a good partner to them. And it will start first with probably services on the site acquisition side of things, but we think it will certainly morph to and turn into leasing business.

Awesome. Thanks, guys.

Thanks very much. So, you mentioned a couple of questions back about the T-Mobile pace being 90 days to 120 days slower than you expected. So, I just wanted to be clear. You were expecting second quarter activity that got pushed into Q3 or you were expecting Q3 activity that doesn't see full run rate until Q4?

I was expecting when the merger was completed that they would hit the ground running in terms of applications and activity. And I was mistaken. What they chose to spend their time on was synergies and integration and getting the Dish deal done and all things, in hindsight, made tremendous sense for T-Mobile and had to be done, and that's basically what has happened.

Great. Great, that's helpful. And then any kind of thoughts on the other two carriers out there in terms of just the cadence getting stronger or weaker, or the same out of AT&T and Verizon?

Really business as usual, Jon.

And then lastly, just a quick question, both of your U.S.-listed peers have ATMs in place, and I'm wondering if that's something that you would consider given some of the comments you made about international and you've done data centers and so forth.

Not something we've thought of really. So, we're looking for opportunities to buy our stock back.

Hey, Jeff. Regarding companies getting a head start, there's a prevailing belief that the C-band will enable one company to get off to a strong start. Should you already be engaging with carriers? I realize C-band won't kick off until December, but that's just a couple of months away. Are you currently in talks with operators that would indicate those expecting to succeed with C-band are preparing to hit the ground running in 2021? That's definitely the belief in the market. I'm curious about when we might anticipate those discussions taking place between the carriers and you.

I would answer that question with one word, Walt, indirectly.

Can you hear me now?

Yes, I can now.

I didn't quite catch your answer, but I understand what you mean. I apologize for that. My second question was regarding Brazil. If you were to purchase your existing operations in Brazil today, what do you consider a fair multiple for that business? It only represents about 15% of your EBITDA, but given the current situation in Brazil with the currency fluctuations and what the President is doing regarding COVID and other factors, what do you think is a reasonable benchmark or what price would you be willing to pay for an asset there?

Well, I'm not going to answer that because I don't know what it will do to the stock. I will answer the question this way: Brazil continues to be a country that has tremendous opportunity. We're so far ahead of our operational plan there. This is all about FX in Brazil. Everything else is great. If you look at where the things that you mentioned are and how they have affected FX in Brazil, it's been a one, two, three punch between the President down there and the pandemic. I guess what people have to, I guess, consider is, is this the way it's always going to be in Brazil? Is it always going to just depreciate at these kinds of levels? And if it does, then history will say that we made a mistake. I don't believe that. I don't believe that the economy, the people, the demand for wireless services suggests that it will continue on a one-way trip to deterioration. That is how we think about Brazil.

Got it. Thank you.

Thanks for taking the questions. Jeff, you've mentioned backlog several times. Can you discuss the growth you've observed through July and your expectations for year-over-year performance by December? And Brendan, regarding the updated guidance for new domestic leasing, you've adjusted it by $3 million. Does this reduce risk for any T-Mobile bookings you expected for the rest of the year? Also, how has this influenced your guidance, considering T-Mobile was slowing down a year ago? What does the guidance include for T-Mobile this year? Thank you.

Yes, Brandon, it's not necessarily specific to T-Mobile. Obviously, most of our guidance is based on stuff that we've already signed up. So there is a portion of that includes T-Mobile, although they've been slow as we've talked about in the last few quarters. Its contribution to the incremental growth, organic growth is limited. There is still some amount of T-Mobile contribution to our full-year organic growth number that we are including in our guidance based on activity that's happening now and we expect to happen through the balance of the year.

What was your first question mentioned, Brandon?

Well, you mentioned bookings a couple of times and specifically, I think you mentioned sort of picking up after the second quarter ended. So, I was hoping you could give us an update on where you are from a year-over-year standpoint in bookings or even backlog of unsigned lease applications from a year-over-year basis in July and where you expect to be as you finish the year?

We clearly expect to be higher at year-end than we are today. But remember, our growth rate is a trailing 12-month metric. So, it has weakened since Q3 of last year. You need to expect to see that. But in terms of backlogs, we expect the end of Q3 to be better than end of Q2 and the end of Q4 to be better than in Q3.

Yes, we expect that they will be the low point. And obviously, they will be lower than we reported for the second quarter, which is implied in the full-year number.

Would you expect year-over-year third quarter to be better than last year?

Yes.

Yes. Yes, actually.

Good. Thank you.

Hey, thanks for taking the question. So, just to follow-up on Brandon's comments about the $3 million that you lowered, that you took out of new leasing activity guidance. Could you help us understand the assumptions that underpinned that level of contribution from T-Mobile? Did that assume sort of a reasonable run rate by the end of the year? Or do you think that what you had baked into guidance originally you expected to be a midway point to even higher growth in later quarters?

So, I'll answer the second one first. We do expect the third quarter and the fourth quarter will be very similar to each other, but they will be the low point. And obviously, they will be lower than we reported for the second quarter, which is implied in the full-year number. So, you should assume somewhere probably the gross number will be closer to 5.5% or high 5% range in each of the next two quarters domestically. And on the T-Mobile piece, the way that it was guided to previously assumed that they were active in the second quarter in signing up new leases and amendments. The fact that there has been some delay pushes that activity toward the latter half of the year and significantly reduces the amount of the impact of this year's financial statement contributions.

Well, it's not significant. It's basically what happens when you take 90 to 120 days' worth of activity and push it back.

Got it. Thanks. And just one more question, when you talk about you've seen the 5G amendments today, are those coming in as a typical amendments rate that you've seen historically? Or is there some sort of a difference based on the type of equipment you're seeing going up for 5G?

Well, they're coming in as expected. And remember that we did have experience with this for a while with Sprint.

Great, thank you.

Hi, good afternoon. I was wondering if you could focus a little bit on the edge projects that you were mentioning in the initiatives and a couple of questions there. First, if you could talk about the types of learnings that you're looking to extract from the data centers that you've acquired and how that's helping you frame the edge opportunity? And then, the second thing is with the trial that you have in Massachusetts, as well as some of the sites that you've been prepping for the opportunity. How are you thinking about what you can monetize the land for the opportunity for relative to what you get in terms of revenue per tower today? Thanks.

Well, that's the business model choice that needs to be made. There are basically three options for us, which are to be just the basic landlord and run out the pad and the improvements and the connections. The second will be to take the middle ground and own the shell and the infrastructure but let somebody else own the active electronics and operate them; and then the third is to run the whole thing. That's really what the data center ownership and operation is designed to allow us to do when it really comes time to make that decision to be in a position to do. The other thing that we have learned is that for the folks who will be customers at the edge or at the cell site, they all need and will be coming from some other larger data center repository. It's really quite interesting how the connectivity needs to work where large storage goes to moderate size and then ultimately out to the edge, the ultimate edge. The data center connections to the ultimate edge are going to be very important, and that's part of what we're working on here. We want to make sure we understand and have that capability operationally down. Whether in 10 years we own these data centers, I can't tell you, but we will understand what the relationships are between the absolute edge, which ultimately will be our forte, and the data center aggregation points along the way that will be necessary to make it all work.